How to calculate and cut your food cost %

Food cost % is the food you used in a period (opening stock plus purchases minus closing stock) divided by food sales, times 100. To cut it, cost each plate on real yields, compare that theoretical cost with actual cost, then close the gap through portioning, waste control, buying and menu pricing.

What is the food cost percentage formula?

Take the food you used in a period, divide it by the food you sold in that period, and multiply by 100.

Food cost % = (opening stock + purchases − closing stock) ÷ food sales × 100

Three rules keep the number honest:

1. Count stock the same way every time. Same day of the week, same time, before opening, with the same person or two people checking each other.
2. Use sales without GST. GST collected is not your revenue.
3. Include GST you pay on ingredients if you cannot reclaim it. A standalone restaurant that charges 5% GST cannot take input tax credit (GST Council), so the tax on its purchases is a real cost.

Decide whether packaging, beverages and staff meals sit inside or outside the number, then keep that choice. Many operators track food and beverage separately, because the two often run at very different costs and one can hide problems in the other.

How do I cost a single plate?

Write a recipe card, weigh each ingredient as it goes on the plate, and price it at what a usable gram costs you. Add the ingredient costs, then divide by the menu price before GST.

A recipe card needs, for every item: each ingredient and its weight, the purchase unit and price, the yield (see below), the cost per portion, the selling price before tax, and the plate's food cost %. Update prices whenever a supplier changes them, at least monthly for fast-moving items such as dairy, meat and produce.

Our food cost calculator does the arithmetic for one plate.

What is yield, and why does it change the number?

Yield is the share of what you buy that ends up on the plate. You pay for the whole onion, the whole chicken and the whole block of paneer, but you serve only part of each after peeling, trimming, deboning, thawing and cooking.

The cost that matters is the price per usable kilo:

Usable cost per kg = purchase price per kg ÷ yield

Published tables such as USDA's handbook on food yields list typical losses by food and preparation method (USDA Agriculture Handbook 102). Use them as a starting point only. Your own yield depends on your supplier, your knife skills and your recipe. Run a yield test on your top ten ingredients by spend: weigh a purchase, prepare it the way you serve it, weigh what is left, and divide.

What is the difference between theoretical and actual food cost?

Theoretical food cost is what you should have spent: each item's plate cost times the number sold. Actual food cost is what you did spend, from the stock-count formula. The gap between them is the money you can recover.

The usual causes of a gap are over-portioning, waste and spoilage, staff meals and comps not rung through the POS, theft, stock received short or wrong, and supplier price rises not yet on the recipe cards. A POS that tracks items sold makes the theoretical side quick to work out.

Worked example: a café's month

These figures are illustrative, not quotes. We assume a paneer tikka wrap priced at ₹220 including 5% GST, so ₹209.52 before tax.

Plate food cost is ₹59.51 ÷ ₹209.52 = 28.4%. Without the yield adjustment, the paneer and vegetables would have looked cheaper and the plate would have seemed more profitable than it is.

For the month, the café opened with ₹1,20,000 of stock, bought ₹4,80,000 and closed with ₹1,10,000, so it used ₹4,90,000 of food. Food sales before GST were ₹15,00,000. Actual food cost is 32.7%.

Adding up plate cost times items sold from the POS gives ₹4,35,000, a theoretical food cost of 29.0%. The gap is 3.7 points, or ₹55,000 in the month, before any change to suppliers or prices.

What is a good food cost percentage?

It depends on your format, menu and definitions, and we found no reliable public benchmark for Indian cafés or QSRs. Listed chains publish theirs, but each defines food cost its own way.

Westlife Foodworld, which runs McDonald's in West and South India, reported food and paper at 32.4% of sales in Q1 FY27. The same presentation shows that moving processing charges into cost of goods lifted its FY26 figure from 30.1% to 32.3% (Westlife Foodworld).

A chain with national buying power moved its own figure by two points through an accounting change alone. Set your target from your own plate costs and prices, and watch the trend and the gap to theoretical, not someone else's number.

How do I cut food cost without cutting quality?

Start with the gap between theoretical and actual cost. It is waste you already pay for. Then look at buying and the menu.

• Portion control: scales at every station, scoops and ladles sized to the recipe, and photos of each plate on the line.
• Waste log: record every item thrown away, with the reason. Review it weekly and cut prep quantities for what keeps coming back.
• Stock rotation: first in, first out. FSSAI's hygiene schedule for food service sets FIFO as the rule for stock rotation (FSSAI Licensing Regulations).
• Receiving: weigh and check deliveries against the order and the invoice before signing.
• Daily counts: count your five most expensive items every day, not just at month end.
• Buying: get quotes from two suppliers for each major category, buy to a written specification, and check whether a different cut or pack size yields better.
• Cross-use: design the menu so expensive ingredients appear in several dishes and trim goes into soups, stocks or staff meals.
• Menu engineering: find dishes that sell little and cost a lot, and reprice, rework or drop them.
• Prices: when a key ingredient rises and stays up, change the recipe card and the menu price together.

Recalculate monthly. If actual cost moves and theoretical does not, look in the kitchen. If both move, look at suppliers and prices.