How to Calculate Food Cost Percentage

By Scan2Plate · Published 2026-09-21 · 6 min read

Food cost percentage is the cost of the ingredients you used divided by the sales they produced, multiplied by 100. If you used ₹90,000 of ingredients to generate ₹3,00,000 of sales, your food cost is 30%. It is the single most useful number a restaurant can track, and most do not track it.

The formula

Food cost % = (Opening stock + Purchases − Closing stock) ÷ Food sales × 100

The bracketed part is what you actually consumed, which is not the same as what you bought. A restaurant that buys ₹1,00,000 of stock on the last day of the month did not consume it that month, and counting it would make the figure meaningless.

Use food sales, not total sales. If you sell drinks or packaged items at a different margin, mixing them in gives you a blended number that hides both.

A worked example

A restaurant in Darbhanga closes its March books. The figures are:

Consumed = 45,000 + 2,10,000 − 52,000 = ₹2,03,000

Food cost % = 2,03,000 ÷ 6,40,000 × 100 = 31.7%

Note what happened to the ₹52,000 of closing stock: it was bought in March but not consumed, so it is removed. If you skipped that step you would have reported 2,55,000 ÷ 6,40,000 = 39.8%, and spent a week hunting a problem that does not exist.

What the number means

There is no single correct figure, but the ranges are well known and worth knowing.

The trend matters more than the absolute number. A steady 33% is a business you understand. A figure moving from 29% to 36% over three months is a problem with a cause, and the cause is findable while the months are recent.

Where the number goes wrong

• Not counting stock at all. Without opening and closing figures you are measuring purchases, not consumption.
• Counting in mixed units. A 5 kg bag recorded as 5 packets is the commonest single error in an Indian restaurant stock register.
• Forgetting staff meals. They consume stock and generate no sales, so they push the percentage up. That is correct, but you should know it is happening.
• Bills that never got entered. A supplier bill in a drawer is stock you consumed and did not record.
• Comparing a festival month with an ordinary one. Compare like with like or the trend is noise.

Counting stock without it taking an evening

The count is the step that kills the habit, so it has to be quick enough to survive a real month-end.

Count what matters rather than everything. In most kitchens a handful of items — oil, flour, rice, the main proteins, gas — account for the large majority of spend, and counting those weekly gives a more useful figure than counting all ninety items once a quarter and giving up.

Count in the unit you buy in. A 15 kg tin of oil is one tin, not fifteen kilos, unless you are prepared to measure part-tins accurately. Mixed units are the commonest source of a wrong figure, and a consistent approximate count beats an inconsistent precise one.

Count at the same time each period, ideally before service on the same weekday. Comparing a Friday-night closing count against a Monday-morning one measures the weekend, not the month.

Reading it per dish, not just per month

A monthly percentage tells you that something is wrong. It does not tell you what.

The same arithmetic applied to one dish does. Take what a portion costs to make, divide by what you sell it for, and you have that dish's food cost. A biryani that costs ₹95 in ingredients and sells at ₹280 runs at 34%. A plate of fries costing ₹18 and selling at ₹120 runs at 15%.

That last row is the part people get wrong. A low percentage is not automatically the better dish. You bank rupees, not percentages, and a kitchen that fills up with high-margin low-value items can be busy and poor at the same time.

What to do when the number is too high

Work through the causes in order of how likely they are, not how interesting.

1. Check the arithmetic first. Miscounted closing stock is the commonest cause of an alarming figure, and it costs nothing to rule out.
2. Compare purchase rates against last quarter. Supplier prices rise quietly and menu prices rarely follow on their own.
3. Weigh ten portions of your three best sellers. Portion creep is real, gradual, and invisible until measured.
4. Look at wastage. Prep that goes uncooked and dishes returned are both stock consumed with no sale against it.
5. Only then consider theft. It happens, but it is the last thing to conclude and the hardest to act on, and the four checks above explain most movements.

Menu pricing from a target percentage

The same formula runs backwards, which is how a price gets set rather than guessed.

If a dish costs ₹70 in ingredients and you want a 30% food cost, divide rather than multiply: 70 ÷ 0.30 = ₹233. Round to ₹240 and you are at 29%. Setting the price by adding a comfortable-looking margin is how dishes end up at wildly different food costs without anyone intending it.

Two cautions. A target percentage is a starting point, not an answer — what the market will pay and what competitors charge both constrain it. And the ingredient cost has to include everything that goes on the plate: the garnish, the oil, the gas, the portion of rice nobody counted. A cost that only counts the headline ingredient will produce a price that looks healthy and is not.

Making it a number you actually have

The arithmetic is trivial. Having the inputs is the hard part, and that is why most restaurants do not track this.

The two inputs are purchases and sales. Sales you already have if you bill on a system — sales reporting gives them by date range. Purchases are the ones that go missing, because entering forty line items off a paper bill at eleven at night does not happen.

Scanning the supplier bill instead takes seconds, which is the only version that survives contact with a real week. Inventory from scanned bills covers how that works, including the review step before anything is saved.

Questions people ask

See how stock tracking works