Food cost percentage: the one number that tells you if your margins are working
What food cost percentage actually measures, where the target should sit, and how to fix it when it drifts.
A restaurant with a 32% food cost percentage and a 35% target is not in crisis. A restaurant with a 32% food cost percentage and a 28% target is quietly bleeding margin on every plate. The number alone tells you nothing — the target does. And the target depends on concept: a fine-dining bistro that plates a €30 dessert can afford a higher percentage than a sandwich shop where the bread is the product.
The four causes of drift
- Ingredient prices: a 15% rise in the cost of your highest-volume protein raises food cost by roughly 1–2 points if you do not re-price.
- Portion creep: a kitchen that 'just adds a bit more' every month will raise food cost by 3–5 points without changing a single price.
- Waste: spoilage, over-prep, and plate waste add 2–4 points to the number and are invisible until you track them separately.
- Price increases that did not keep up: if ingredient costs rose 20% and you raised menu prices 8%, your food cost percentage rose by about 2 points.
A worked example
A restaurant's signature risotto costs €9 in ingredients and sells for €22. The kitchen adds a bit more parmesan each month.
| Month 1 | €9.00 / €22 = 41% | Above the 35% target |
|---|---|---|
| Month 2 | €9.40 / €22 = 43% | Portion creep visible |
| Month 3 | €9.80 / €22 = 45% | Two months above target |
| Action | Re-price to €24 or reduce parmesan | Either fix brings it back to ~41% |
Two consecutive months above target is the trigger to act. Waiting for the third month means the customer is paying for your drift.
Making it stick
- 1Set the target. Pick a food cost percentage for your concept and write it down. 30% for casual dining, 35% for fine dining, 25% for fast food. The number matters less than the commitment.
- 2Track by line item. Pull cost and sales for your top 20 items monthly. Flag anything above target for two consecutive months.
- 3Diagnose in order. When an item drifts, check ingredient price first, then portion size, then waste, then menu price. Fix the cheapest cause first.
- 4Re-price or re-engineer. A re-price is faster. A re-engineer (swap ingredient, reduce portion, simplify plating) is cheaper. Do both when the drift is more than 5 points.
FAQ
- What is a good food cost percentage?
- 28–35% for most casual dining concepts. Fine dining can carry 35–40%. Fast food should stay below 30%. The right number depends on your concept and pricing structure, not on a universal benchmark.
- Should food cost be calculated per dish or in aggregate?
- Both. Per-dish tells you which item is bleeding. Aggregate tells you whether the menu as a whole is healthy. Track aggregate monthly and drill into per-dish when the aggregate drifts.
- What if my food cost is above target?
- Diagnose in order: ingredient price, portion size, waste, menu price. Fix the cheapest cause first. If the drift is more than 5 points, do both a re-price and a re-engineer.
- How often should I review food cost?
- Monthly. Quarterly reviews are too slow — a 5-point drift caught three months late has already cost you more than the fix.
Keep reading
- How to structure your menu pricing for maximum profit
A practical guide to menu engineering: food cost targets, margin calculations, and pricing psychology.
- Negotiate supplier prices with data instead of complaints
A practical negotiation script for restaurant suppliers: prepare numbers, present them, close terms.
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