Food Costs
How to Calculate Food Cost Percentage Properly
Understand exactly how much each dish costs and whether your current pricing protects your margin.
Food cost percentage is the single most-quoted number in hospitality — and the one most operators get quietly wrong. The formula itself is simple. Getting a useful answer takes a bit more discipline.
The formula, properly
Food cost % = (Cost of ingredients ÷ Selling price ex-VAT) × 100. Both sides must be ex-VAT, both sides must include everything on the plate — including the oil the chicken was fried in and the sauce nobody costed.
A worked example
A burger sells for £14 (ex-VAT £11.67). Bun, patty, cheese, sauce, salad and portion of fries add up to £3.85. Food cost % is 3.85 ÷ 11.67 = 33%. Comfortable for casual dining.
What's usually missing
- Trim and prep waste (a 200g steak often starts life as 260g) - Garnish, sauces, condiments and butter that hit the pass - Free bread, table snacks, staff tastings - Wastage from prep errors and comps
What a healthy number looks like
Casual dining runs 30–35%. Gastro pubs 28–32%. Fine dining 25–30%. Street food and takeaway can push 35–40% if labour is low. Numbers outside these bands aren't wrong — they're a prompt to check your model.
What to do next
Plug your figures into the Food Cost Calculator. If your food cost % is above target, you have three levers: raise the price, tighten the spec, or renegotiate the ingredient. In that order, usually.