Food cost percentage: targets and how to calculate it

Your accountant tells you food cost last month was 34 percent. Is that good? Bad? Up or down because of prices, portions, waste or someone taking chicken home? A single number at month end can't tell you, and by the time you see it, the money is gone.

The fix is to track two food cost numbers instead of one: what your food should have cost based on your recipes and sales, and what it actually cost based on stock and purchases. The gap between them is where your margin leaks. This guide covers both formulas, how to cost a recipe properly, rough targets by concept, portion control, and a weekly routine that catches problems while you can still fix them.

1The two food cost numbers

Actual food cost (from your stock and purchases)

Actual food cost % = (opening inventory + purchases − closing inventory) ÷ food sales × 100

The top half of the formula is your cost of goods sold (COGS): everything you had, plus everything you bought, minus what is still on the shelves. Use food sales net of VAT, and keep drinks separate if you sell a lot of them, because their cost ratios are very different.

Illustration for one month:

Line	EGP
Opening inventory (counted on the 1st)	85,000
Plus purchases during the month	310,000
Minus closing inventory (counted on the 30th)	92,000
COGS	303,000
Food sales, net of VAT	900,000
Actual food cost	33.7 percent

Theoretical food cost (from your recipes and sales)

Theoretical food cost % = Σ (recipe cost × units sold) ÷ food sales × 100

Multiply each dish's plate cost by how many you sold, add them up, and divide by the same food sales. If your recipes say that month should have cost EGP 270,000, theoretical food cost is 30.0 percent.

The difference, 3.7 points or EGP 33,000 in this example, is variance: food that was bought and is no longer on the shelf, but was never sold. Waste, over-portioning, staff meals nobody recorded, remakes, mistakes in receiving and theft all live in that gap.

2Cost every recipe, including yield

Theoretical food cost is only as good as your recipe costs, and the most common error is ignoring yield. You buy beef by the kilo but you can't serve the whole kilo: trim, fat and cooking loss take some of it.

Usable cost per kg = purchase price per kg ÷ yield

If beef costs EGP 450/kg and you keep 900 g of every kilo after trimming, the yield is 0.9 and the real cost is 450 ÷ 0.9 = EGP 500/kg. Measure yield yourself: weigh a delivery before and after prep, three times, and take the average.

An illustrative recipe card for a kofta plate:

Ingredient	Portion	Cost (EGP)
Beef, trimmed (at usable cost 500/kg)	180 g	90
Fat, onion, parsley, spices	40 g	6
Rice	60 g raw	3
Tahini	40 g	5
Salad	side	6
Grilled tomato and pepper	side	4
Bread	1 piece	3
Plate cost		117

At a menu price of EGP 450 including 14 percent VAT, the net price is 450 ÷ 1.14 = 394.70, so food cost for this dish is 117 ÷ 394.70 = 29.6 percent. For how to turn plate costs into prices, see how to price menu items for profit.

3Targets by concept

There is no universal right number. Rent, labour and your price position change what works. These are rough rules of thumb used across the industry, useful as a sense-check rather than a goal:

Concept	Typical food cost range (percent of sales)	Why it sits there
Café and coffee drinks	15 to 25	Coffee, milk and syrups are cheap per cup; labour and rent dominate
Pizza	25 to 30	Dough and sauce cost little; cheese is the swing item
Fast food and sandwiches	25 to 32	Tight portions, high volume, packaging adds up
Casual dining	28 to 35	Mixed menu of cheap and expensive dishes
Grill, steak and seafood	32 to 40	Protein-heavy plates; margin is earned in pounds, not percent
Fine dining	28 to 38	Premium ingredients offset by high prices and set menus

The target that matters is the blended one for your whole menu. A grill with a 38 percent average can be very profitable if its average check is high and labour is lean. A café at 30 percent may be in trouble. Always read food cost together with labour cost: the two together are your prime cost, and that is what has to leave room for rent and profit.

4Portion control: where most of the gap comes from

Small, invisible overportioning is usually the biggest single contributor to variance, because it happens on every plate. Take the kofta plate above. The recipe says 220 g of mix, but on a busy night the grill cook shapes 245 g by eye.

• Extra mix per plate: 25 g at about EGP 0.44/g = EGP 11
• At 60 plates a day: EGP 660 a day
• Over 30 days: about EGP 19,800, on one dish
• Food cost for that dish drifts from 29.6 to about 32.4 percent without anything changing on the invoice

The fixes are unglamorous and they work:

• A scale at every station that portions protein, and a rule that it gets used during rush, not just during training.
• Pre-portioning in prep: kofta weighed and shaped before service, chicken bagged by portion, cheese pre-weighed for pizzas.
• Fixed-size tools: ladles, scoops and sauce cups that match the recipe card.
• A photo of the correct plate posted at the pass, so everyone plates to the same picture.
• A weekly spot-check: weigh five random plates of your top three dishes.

5A weekly COGS routine that catches problems early

Monthly food cost is a post-mortem. A weekly check on your highest-value items is an early warning.

1. List your top 15 to 20 ingredients by spend. Usually proteins, cheese, oil, and a few specialist items. They are most of your cost.
2. Count them at the same time each week, before opening on the same day.
3. Calculate usage: opening count plus deliveries minus closing count.
4. Compare with theoretical usage: units sold of each dish times the grams in its recipe.
5. Investigate any item that is off by more than a few percent, starting with the most expensive.

Pattern you see	Likely cause	First check
Actual usage above theoretical on one protein	Over-portioning or unrecorded waste	Weigh plates during service; check the waste sheet
Gap spread across everything	Recipe costs out of date, or sales missing from the system	Recost with current invoices; check for unrung orders
Gap on portable, high-value items only	Theft or receiving errors	Weigh deliveries against invoices; review who has storeroom access
Food cost up but usage matches recipes	Supplier prices rose	Compare invoice prices month on month

Receiving and counting are covered step by step in our restaurant inventory management guide, and the waste side of the gap in how to reduce food waste.

6Spreadsheet or software?

A spreadsheet works if one disciplined person owns it: one tab of ingredient prices, one of recipe cards that reference those prices, one of weekly counts. The weak point is upkeep. When the chicken price changes, every recipe must update, and someone has to remember to paste in the new invoice price.

Software earns its keep by linking the pieces. On Menyo's Professional plan, the inventory module keeps an ingredient library with current costs, links a recipe to each menu item with a live food cost and margin, records stock counts with variance, logs waste with a reason, and reports usage and waste over a period. Whatever tool you use, the discipline is the same: accurate recipes, regular counts, and someone who looks at the gap every week.

7Frequently asked questions

What is a good food cost percentage for a restaurant?

For many casual restaurants a blended figure somewhere around 28 to 35 percent of net food sales is a reasonable range, but it depends on concept. Judge it alongside labour cost and your average check, not on its own.

What is the difference between actual and theoretical food cost?

Actual food cost comes from stock counts and purchases: what really left your shelves. Theoretical comes from recipes and sales: what should have left. The difference is variance, caused by waste, over-portioning, errors and theft.

How often should I count inventory?

Count your highest-value ingredients weekly and do a full count monthly. Always count at the same time of day so the numbers are comparable.

Do staff meals count as food cost?

They use food, so record them. Either log them as a separate line at cost so they don't show up as unexplained variance, or budget them explicitly. What matters is that they are written down.

8Where to start this week

Cost your ten best-selling dishes properly, with yields. Count your top fifteen ingredients on the same morning next week and the week after. Compare usage with what your sales say you should have used. That single exercise usually shows exactly where the money is going.

If you want recipe costs, stock counts and waste in one place, Menyo's Professional plan includes inventory and recipe costing with a 7-day trial. Start your trial here.