Profitability • Cost Guide
Food cost percentage & menu pricing, explained.
Food cost is the single most-watched number in any restaurant — and the most commonly miscalculated. Here's how to find your real number, what healthy looks like, and how to price a menu so every plate earns its margin.
The Formula
How to calculate food cost percentage.
One formula, four steps. Do it weekly and you'll catch problems while they're still small enough to fix.
Food Cost Percentage
(Beginning Inventory + Purchases − Ending Inventory) ÷ Food Sales × 100
01
Count your inventory
Take a full, consistent inventory at the start and end of the period — same shelves, same count sheets, same valuation method. Inconsistent counts make every number after them meaningless.
02
Add your purchases
Total every food invoice for the period. Include credits, and keep food and beverage in separate buckets so neither one hides the other's problems.
03
Calculate cost of goods sold
Beginning inventory + purchases − ending inventory = the food you actually used. That number — not your invoices — is your real food spend for the period.
04
Divide by food sales
COGS ÷ food sales × 100 = your food cost percentage. Track it weekly, not monthly. A month of drift is four weeks you can't get back.
Healthy Targets
What a good food cost percentage looks like.
There's no single magic number — the right target depends on your concept, your labor model and your price point. These are the ranges operators commonly plan against.
Full-service restaurants
Roughly 28–35%
Higher labor and service costs usually mean food cost needs to sit in the low-to-mid thirties or below to leave room for prime cost. Fine dining with premium proteins can run higher and still work — if labor is disciplined.
Fast-casual & counter service
Roughly 28–32%
Lower labor lets food cost run a touch higher, but volume concepts live and die on portion control and waste. A point or two of slippage here compounds fast across thousands of transactions.
Bars & beverage programs
Roughly 18–24% pour cost
Liquor typically runs the lowest cost percentage in the building, beer sits in the middle, and wine by the glass needs the most attention. Beverage is where strong operators fund the rest of the P&L.
These are common industry planning ranges, not rules. Prime cost — food plus labor — is the number that actually decides whether a concept works, so set your food cost target in the context of your full P&L.
Menu Pricing
How to price menu items for profit.
Pricing is a math problem before it's a marketing decision. Work from your costs to your price — then check it against your market.
01
Cost the plate, not the recipe
Cost every component on the plate — protein, starch, garnish, sauce, oil, even the fryer basket's share. A recipe card that skips garnishes and waste is a margin leak wearing a disguise.
02
Set your target food cost first
Decide what percentage the item needs to hit based on your concept and labor model — then price to it: plate cost ÷ target % = menu price. Never price from the competition's menu first.
03
Check the market ceiling
If the math says $19 and your market won't pay more than $16, the fix is the plate — a smaller portion, a different cut, a cheaper garnish — not a lower margin you never recover.
04
Watch the mix, not just the items
A menu full of low-margin bestsellers underperforms a menu that sells its stars. Use menu engineering — popularity versus profitability — to steer guests toward the plates that pay.
Menu Price Formula
Plate Cost ÷ Target Food Cost % = Menu Price
Example: a dish that costs $4.50 to plate, priced to a 30% food cost, belongs on the menu at about $15. Round to price points your guests accept — but never below the math.
From Operator Experience
The four habits that quietly destroy margins.
These show up in almost every struggling P&L we've looked at — including lessons learned the hard way in our own businesses.
01
Pricing once and never revisiting
Ingredient costs move constantly. A menu priced in January can be underwater by June. Re-cost your top sellers every quarter, and any time a key vendor price moves.
02
Ignoring waste, comps and staff meals
Food that isn't sold is still cost. If waste and comps aren't tracked, your theoretical food cost will always look better than your actual — and you'll trust a number that isn't real.
03
Letting portion sizes drift
An extra ounce of protein per plate, across a year of service, is real money. Scales, portion tools and line checks are boring — and they are exactly where margins are protected.
04
Discounting without doing the math
A 20% promotion on a 30% food-cost item doesn't cut profit by 20% — it can erase it entirely, because food, labor and overhead don't shrink with the price.
Put the Numbers to Work
Get the tools that make this routine.
The free 125-page Restaurant & Bar Startup Blueprint covers menu strategy and budgeting, and the Operators Vault includes the inventory sheets, recipe costing templates and financial controls that turn food cost from a monthly surprise into a weekly habit.
Keep Reading
- — How much does it cost to open a restaurant? — budget planning before the doors open
- — Menu engineering consulting for a menu built around profitability
- — All free tools and resources for hospitality owners