1. What is Food Cost Percentage?

Food Cost Percentage is a key metric in the food service industry that shows what percentage of your revenue is spent on food costs. It helps restaurants and food businesses track profitability and manage expenses effectively.

2. How Does the Calculator Work?

The calculator uses the food cost percentage equation:

Where:

• \( Cost \) — Total cost of food ingredients (USD)
• \( Revenue \) — Total revenue from food sales (USD)

Explanation: The equation calculates what portion of your food sales revenue is consumed by the cost of ingredients.

3. Importance of Food Cost Calculation

Details: Maintaining an optimal food cost percentage (typically 25-35% for restaurants) is crucial for profitability. It helps identify waste, pricing issues, and opportunities for cost reduction.

4. Using the Calculator

Tips: Enter your total food costs and revenue in USD. Both values must be positive numbers, and revenue cannot be zero.

5. Frequently Asked Questions (FAQ)

Q1: What is a good food cost percentage?
A: Most restaurants aim for 25-35%. Fine dining may be higher (35-45%), while fast food is often lower (20-25%).

Q2: How often should I calculate food cost percentage?
A: Ideally weekly or monthly to track trends and catch problems early.

Q3: Does this include labor costs?
A: No, this calculates only the percentage of revenue spent on food ingredients.

Q4: What if my percentage is too high?
A: Consider portion control, supplier negotiations, menu engineering, or price adjustments.

Q5: Should I include drinks in this calculation?
A: Typically no - beverage costs are usually calculated separately as they often have different margins.