Food cost percentage measures the relationship between what you spend on ingredients and the revenue those ingredients generate. For most full-service restaurants, the target range is 28 to 35 percent. Exceeding this threshold erodes profitability rapidly.
Calculating Food Cost Accurately
The formula is straightforward: beginning inventory plus purchases minus ending inventory, divided by total food sales. However, accuracy depends on consistent inventory practices, proper waste tracking, and capturing all costs including delivery fees and credits.
Menu Engineering for Margins
Not all menu items are created equal. A menu engineering matrix plots each item by its popularity and profitability. Stars (high popularity, high profit) should be promoted aggressively. Dogs (low popularity, low profit) should be removed or reworked.
Portion Control Systems
Standardized recipes with exact measurements prevent the gradual portion creep that silently inflates food costs. Invest in scales, measured scoops, and portion-controlled packaging. Train every cook to follow specs to the gram.
Weekly Variance Reviews
Compare actual food cost to theoretical food cost weekly. Theoretical cost is what you should have spent based on sales mix and recipe costs. The gap between actual and theoretical reveals waste, theft, or portioning errors that need immediate attention.