Restaurant food-cost percentage shows how much ingredient cost is used to produce food sales. It is one of the most useful controls for an Indian restaurant, but only when recipes, yields, inventory and waste are recorded consistently.
Food-cost percentage formula
Food-cost percentage = Cost of food consumed ÷ Food sales × 100
For a proper monthly calculation:
Cost of food consumed = Opening inventory + Purchases − Closing inventory − eligible transfers/adjustments
Example: opening stock ₹1,20,000 + purchases ₹4,00,000 − closing stock ₹1,00,000 = ₹4,20,000 consumed. If food sales are ₹14,00,000, food cost is 30%.
Free recipe food-cost calculator
| Ingredient | Usable quantity | Recipe cost |
|---|---|---|
| Chicken after trim/yield | 250 g | ₹75 |
| Gravy base | 220 g | ₹42 |
| Dairy, oil and spices | As standard recipe | ₹28 |
| Garnish and accompaniments | Per portion | ₹15 |
| Total portion cost | ₹160 |
If the net selling price allocated to the dish is ₹500, theoretical food cost is ₹160 ÷ ₹500 × 100 = 32%. Use prices excluding taxes collected on behalf of government when your accounting policy requires it.
Why purchase cost is not recipe cost
A ₹200-per-kilogram raw ingredient may cost more per usable kilogram after trimming, bones, peeling, thaw loss or cooking shrinkage. Conduct yield tests:
Yield percentage = Usable weight ÷ Purchase weight × 100
If 1 kg produces 800 g usable product, a ₹200 purchase price becomes ₹250 per usable kg before cooking loss.
Theoretical versus actual food cost
- Theoretical cost uses standard recipes multiplied by the sales mix.
- Actual cost uses inventory consumption.
- Variance can reveal over-portioning, waste, theft, incorrect bills, complimentary items or recipe errors.
Do not punish staff from one unexplained variance. Check receiving, stock count, units of measure and recipe mapping first.
How to count inventory
- Count at the same time and cut-off every week or month.
- Use consistent units—kg, litre, piece or packet.
- Separate unopened and partial quantities logically.
- Use the same valuation method approved by your accountant.
- Investigate unusual movements before closing the period.
Common food-cost mistakes
- Ignoring staff meals, tasting, buffet leftovers and complimentary dishes.
- Costing recipes from memory.
- Using gross selling price while comparing it with net sales.
- Forgetting packaging in takeaway contribution analysis.
- Not updating supplier prices.
- Applying one target percentage to every dish.
Food-cost percentage is not enough
A higher-percentage dish can still contribute more rupees. A ₹900 dish costing ₹360 has 40% food cost but contributes ₹540 before other costs; a ₹300 dish costing ₹75 has 25% food cost but contributes ₹225. Use both percentage and contribution margin when applying the restaurant menu-pricing formula.
Weekly control routine
Update ingredient prices, review high-value inventory, record waste, compare theoretical and actual usage, verify portions and investigate top variances. Link findings to purchasing and staff training instead of simply cutting portion sizes.