Restaurant food cost: how to measure it, cost every plate and bring it down

On this page

1. Part 1: Measure your actual food cost
2. Part 2: Cost every recipe
3. Part 3: Price from the plate cost
4. Part 4: Compare what you spent with what you should have spent
5. Part 5: Ways to bring food cost down
6. When a cost jumps
7. A food cost routine
8. Where Advantage fits

Food cost is the share of your food sales that you spend on the food itself. It is a large cost, and one you can change every week. This guide shows how to measure it the same way every time, how to cost each recipe, how to price from that cost, and where the money goes between the invoice and the plate.

There is no single right food cost percentage. The right number depends on your menu, your prices and your style of service. What matters most is that you measure it the same way every period and know why it moves.

Every number in the examples is made up, only to show the math.

Part 1: Measure your actual food cost

The formula

Food cost for a period comes from three numbers: what you had at the start, what you bought, and what you had left at the end. It is the same cost of goods sold math the IRS uses for a business’s tax return:

• Food cost equals starting inventory, plus purchases, minus ending inventory.
• Food cost percentage equals food cost divided by food sales.

Line	Amount
Food inventory at the start of the month	$8,000
Plus food purchases during the month	$21,000
Minus food inventory at the end of the month	$7,500
Food cost for the month	$21,500
Food sales for the month	$70,000
Food cost percentage	30.7%

Rules that keep the number honest

1. Count on the same day and at the same time each period, before deliveries arrive.
2. Count everywhere: the walk-in, the reach-ins, the freezers, dry storage and the line.
3. Value the count the same way every time, for example at the latest invoice price. The IRS describes inventory methods such as first in, first out. Ask your accountant which to use for taxes.
4. Include every purchase, including cash runs to a store, and take off every credit.
5. Keep food apart from drinks and paper goods, and decide once where to-go containers belong.
6. Record food that leaves without a sale: transfers to the bar, staff meals, comps and remakes. They are costs too, and you cannot manage what you never see.
7. Use the same sales number every time. Decide whether food sales are counted before or after discounts and comps, and stick to it. Changing the rule changes the percentage even when nothing in the kitchen changed.

Count weekly if you can, at least for your costliest items such as meat, seafood and cheese. A monthly number tells you what happened. A weekly number gives you time to fix it.

Give one person, such as the chef or kitchen manager, the job of owning the number: the counts, the recipe costs and the weekly review. When food cost belongs to everyone, nobody chases it.

Part 2: Cost every recipe

Actual food cost tells you what happened. Recipe costs tell you what should have happened, item by item.

Build a recipe card

For each menu item, write down every ingredient, the amount on the plate and the unit: ounces, grams or each. Include the small things: oil, butter, spices, garnish, sauces, and the container if the item leaves the building. Build sauces, dressings and doughs as recipes of their own, then use them as ingredients.

Use the usable cost, not the purchase price

Not everything you buy ends up on the plate. Trimming, peeling, bones and cooking loss shrink what you paid for. The usable share is called the yield.

With made-up numbers: a 10-pound case of whole carrots costs $12, or $1.20 a pound as bought. After peeling and trimming, 8 pounds are left. The yield is 80%, and the usable cost is $12 divided by 8, or $1.50 a pound. Costing the recipe at $1.20 would understate the carrots by a fifth.

Test yields on your own products. Weigh what comes in, prep it the way your cooks do, and weigh what is left. For a starting point, USDA’s Food Buying Guide, written for child nutrition programs such as school meals, lists yield information for many foods.

A plate cost, with made-up numbers

Ingredient	Amount	Usable cost	On the plate
Chicken breast, trimmed	6 oz	$0.30 per oz	$1.80
Rice, cooked	5 oz	$0.06 per oz	$0.30
Vegetables	4 oz	$0.12 per oz	$0.48
Sauce, its own recipe	2 oz	$0.15 per oz	$0.30
Oil, seasoning, garnish			$0.22
Plate cost			$3.10

Update recipe costs whenever an invoice price changes. A recipe costed at last season’s prices tells you little about this week’s plate.

Do not forget the to-go container

Takeout and delivery add costs that a dine-in plate does not have: the container, the lid, the bag, the napkins and the utensils. With made-up numbers, say those add $0.65 to the chicken plate above. On a $11.95 menu price, food alone is 25.9% of the price, but food and packaging together are 31.4%. Cost to-go items as their own recipes, so the margin you see is the margin you earn.

Part 3: Price from the plate cost

The simplest way to price an item is to divide its plate cost by your target food cost percentage. With a 28% target, the chicken plate comes out at $3.10 divided by 0.28, or $11.07. You might round it to $11.50 or $11.95. Then check the price against similar dishes nearby and against what guests will think the dish is worth. Our markup and margin calculator shows the margin at any price.

Percentages and dollars

A low food cost percentage does not always mean the most profit. With made-up numbers:

Item	Plate cost	Price	Food cost	Profit per plate
Pasta	$2.40	$14.00	17%	$11.60
Steak	$9.00	$28.00	32%	$19.00

The steak has the higher food cost percentage, but each one leaves $7.40 more than a pasta to pay for staff, rent and profit. You deposit dollars, not percentages, so watch both. Our menu design guide shows how to weigh both across the whole menu.

Part 4: Compare what you spent with what you should have spent

Multiply each item’s plate cost by the number sold in the period, from your register’s sales report, and add them up. That is your ideal food cost: what the food would have cost if every plate matched its recipe and nothing was wasted.

With made-up numbers: your recipes and sales say the month’s food should have cost $19,950, or 28.5% of $70,000 in food sales. Your inventory says it actually cost $21,500, or 30.7%. The gap is 2.2 points, or $1,550 for the month.

Expect some gap, since no kitchen hits every recipe exactly. A gap that grows, or that sits in one category, is the signal to dig. The usual places to look:

• Portions bigger than the recipe.
• Waste and spoilage: food that expired, was dropped, or was made and not sold.
• Comps, staff meals and remakes that were never recorded.
• Short deliveries and wrong prices on invoices.
• Menu prices that never caught up with a cost increase.
• Items rung up under the wrong button, or not rung up at all.
• Theft.
• Mistakes in the inventory count itself.

Find where the gap sits

Split both numbers by category before you go looking. With made-up numbers, the same month might break down like this:

Category	Should have cost	Did cost	Gap
Meat and seafood	$8,400	$9,300	$900
Produce	$3,500	$3,800	$300
Dairy	$2,600	$2,700	$100
Dry goods and everything else	$5,450	$5,700	$250
Total	$19,950	$21,500	$1,550

More than half the gap sits in meat and seafood, so start there. Weigh portions on the line, check the last month of meat and seafood invoices for price changes and short deliveries, and read the waste log for those items. Work on the biggest gap first instead of chasing every small one at once.

Part 5: Ways to bring food cost down

None of these needs a big project. Pick two or three, start them this week, and watch the gap.

1. Receive carefully. Check every delivery against the invoice before the driver leaves: count, weigh, check dates and temperatures, and get credits in writing. Our article on catching vendor invoice mistakes has a routine.
2. Watch market prices. USDA’s Market News publishes wholesale price reports for produce, meat, dairy and more, and USDA’s Food Price Outlook forecasts food price changes every month. Use them to tell a market move from a supplier’s markup and to plan menu changes.
3. Write specs. For each main product, write down the cut, size, grade or brand you want. Then compare suppliers on the same product, not just the same name.
4. Store and rotate. Put new deliveries behind older stock so the oldest is used first, and label what you prep. The FDA Food Code calls for date marking of ready-to-eat foods that need refrigeration for safety and are kept more than 24 hours, with a limit of 7 days at 41°F or colder. Ask your health department which rules apply to you.
5. Control portions. Give cooks scales, portion scoops, ladles and a photo of each finished plate. Weigh a few portions every shift.
6. Prep to a forecast. Set prep amounts by day of the week from your sales history, instead of making the same amount every day.
7. Keep a waste log. Every discard gets an item, an amount and a reason, and you review the log each week. The EPA’s Wasted Food Scale ranks preventing wasted food as the best option of all.
8. Use ingredients more than once. Build the menu so trim and extra stock from one dish can go into another, such as a soup, a special or the staff meal.
9. Record every comp and remake in the register with a reason, and review them each week.
10. Donate safe surplus. Federal law protects donors, including restaurants, that give food in good faith. Ask a local food bank what it accepts, and your health department how to handle it.
11. Fix prices that fell behind. When a cost rises, recheck the menu price of every item that uses it.
12. Reshape the menu. Rework items that sell slowly and cost a lot, and feature items that earn more. Our menu design guide shows how.

When a cost jumps

Sometimes one ingredient’s price rises sharply in a single week. Before you reprint the menu, look at your choices in order:

1. Check the invoice. Make sure the new price is real and not a billing mistake.
2. Ask another supplier for the same spec. A move across the whole market will show up there too.
3. Look at the recipe. Work out how much of the plate cost that ingredient is. If it is a garnish, a smaller amount or a swap may fix it. If it is the main ingredient, it will not.
4. Run it as a special. Take the item off the regular menu for a while, and sell it as a special at a price that covers today’s cost.
5. Raise the price in a small step if the cost stays high, and watch how many you sell afterward.

Write down what you changed and when, so you can undo it when the price comes back down.

A food cost routine

When	Task
Every delivery	Check against the invoice and record credits
Every shift	Weigh a few portions and fill in the waste log
Every week	Count costly items, enter invoices, review comps and waste
Every month	Full count, actual and ideal food cost, recipe costs updated

Keep the routine boring and the same every time. The value is in the trend, not in any one week.

Where Advantage fits

Recipes and food cost builds each recipe from its ingredients, prices it from your latest vendor invoices, shows the cost and margin of every menu item, and alerts you when an ingredient’s cost moves. Invoices and purchases gives each location its own invoice email address, files vendors’ EDI invoice files as orders that update your item costs, and sends a daily email listing the costs that changed. Expenses and reports brings sales, cost of goods and expenses together in a monthly income statement.