How to Calculate Food Cost for Your Restaurant (Simple Formula + Example)

Ask ten restaurant owners what their food cost is and most will give a rough guess. Yet food cost is one of the biggest numbers in your business — often the biggest after rent and salaries. If you do not know it dish by dish, you cannot know which dishes make money and which quietly lose it.

The good news: calculating food cost is simple arithmetic. This guide shows you how.

The basic food cost formula

Food cost % = (Cost of ingredients ÷ Selling price) × 100

If a dish costs you ₹90 in ingredients and you sell it for ₹300, your food cost is 30%. The remaining 70% has to pay for rent, staff, gas, electricity, packaging, marketing — and your profit.

How to cost one recipe, step by step

Let us take an example dish. The prices below are only for illustration — use your own purchase prices.

1. List every ingredient and the quantity per plate. For example: paneer 150 g, curd 40 g, oil 15 ml, onion and capsicum 60 g, spices and masala 10 g.
2. Find the cost per gram or ml from your latest purchase bill. If paneer costs ₹400 per kg, it is ₹0.40 per gram.
3. Multiply and add. Paneer 150 g × ₹0.40 = ₹60; add the cost of every other ingredient the same way.
4. Add a small allowance for waste and garnish. Trimming, cooking loss and the chutney on the side are real costs. Many kitchens add a few percent to cover them.
5. Divide by the selling price. If the total comes to ₹95 and the dish sells for ₹320, the food cost is about 30%.

Do this for your top 20 dishes first. They usually make up most of your sales.

What food cost percentage should you aim for?

There is no single right number — it depends on your menu, location and style of service. As a general guide, many restaurants try to keep overall food cost somewhere around 28–35%, while drinks and beverages often run lower. More important than the average is the spread: a few dishes with very high food cost can drag down the whole menu.

Theoretical vs actual food cost

Recipe costing gives you the theoretical food cost — what the dish should cost if everything goes to plan. Your actual food cost comes from stock: opening stock + purchases − closing stock, divided by food sales.

The gap between the two is where money disappears: over-portioning, wastage, spoilage, theft and mistakes in purchasing. Tracking both numbers every week is one of the most useful habits an owner can build.

7 ways to bring food cost down without hurting quality

• Standardise portions. Use scoops, ladles and weighing scales for expensive ingredients.
• Update recipe costs when prices change. When paneer or oil prices rise, your margins fall the same day.
• Re-price or re-design low-margin dishes. Sometimes a small price change or a cheaper garnish is enough.
• Push high-margin dishes. Place them well on the menu, add photos and let staff (or smart menu suggestions) recommend them.
• Record wastage with a reason. Patterns show up quickly — such as over-preparation on slow weekdays.
• Buy against real usage. Order based on what you actually sell, not habit.
• Count key ingredients weekly. Compare counted stock with what the system says you should have.

Let software do the maths

Doing this in a notebook or spreadsheet works for a few dishes, but it is hard to keep up every day. In DUOZENT, every dish has a recipe, so each sale reduces stock automatically. Item-wise profit reports show which dishes earn the most, and stock counts reveal the gap between what you should have and what you actually have.

Want to see your real food cost, dish by dish? Book a free demo.