What is a good food cost percentage for a restaurant?

How to calculate it

1. Count opening inventory (or use last period's closing count).
2. Add food purchases for the period, from invoices, not payments.
3. Subtract closing inventory, counted on the last day of the period.
4. Divide by food sales for the same dates. Keep beverage separate, it runs at a different cost.

Skip the inventory count and you're measuring purchases, not cost. A big delivery on the 30th makes one month look terrible and the next one look great.

Why there's no single right number

A steakhouse and a pizza place can both be healthy with very different food cost percentages. Premium ingredients, portion sizes, prices and how much labour goes into each plate all move the target. That's why food cost is best read alongside labour as prime cost.

Actual vs. theoretical food cost

Theoretical food cost is what your food should have cost, based on your recipes and what you sold. Actual food cost is what it did cost, from the inventory count. The gap between them is where margin leaks:

• Portions drifting larger than the recipe
• Waste, spoilage and over-prepping
• Supplier price increases not reflected in menu prices
• Comps, staff meals and mistakes not being recorded
• Theft

A small, stable gap is normal. A gap that grows period after period is the early warning, and it shows up while it's still small enough to fix.

Making the number trustworthy

• Count inventory at the same time, the same way, every period.
• Code invoices to food, beverage and supplies as they arrive.
• Keep recipe costs up to date when supplier prices change.
• Report it by location.