How to Calculate Food Cost: Formula, Example, Table (Step by Step)
Food cost of a dish in 3 steps: formula, three examples worked to the penny (fish and chips, cocktail, pizza) and benchmarks for bars, pizzerias and restaurants.
How much does the dish you're about to send out actually cost you? Not the price the customer pays, but the real bill for the ingredients inside it. That's the question food cost answers, and knowing how to calculate it is the difference between a menu that makes you money and one that has you working hard for very little.
The good news: the maths is simple. A formula, a scale, and your invoices. Let's walk through it with three examples worked to the last cent and the right benchmarks for telling whether your percentage is healthy or not.
What food cost is
Food cost is what the raw ingredients needed to make a dish cost you. It's usually expressed as a percentage of the selling price, so you can compare different dishes against each other and see which ones leave you the most margin.
Don't confuse it with the price of the dish: food cost isn't what you sell it for, it's what the ingredients inside that portion cost. A dish selling at 14 € with 3 € of ingredients has a food cost of 21%.
The formula
The base formula is a single one and never changes:
Food cost % = (ingredient cost ÷ selling price) × 100
Two rules almost nobody follows cleanly:
- Both numbers are taken net of VAT. Using a VAT-inclusive selling price pushes the percentage down. On the menu VAT is inside the price; on invoices VAT is shown separately; strip it out before any calculation.
- The cost is for the actual portion, not the whole pack. If you buy a kilo of cheese and use 25 grams, only the cost of those 25 grams goes into food cost.
You need just one thing: the price per kilo (or per litre, or per unit) of each ingredient, which you'll find on your supplier invoices. If you're not sure how to read one and where the unit price sits, start with the guide on how to read a supplier invoice.
Example 1: fish and chips
Let's take a real dish and calculate it all the way through. A plate of fish and chips you sell at 13.50 € (net of VAT). Here are the ingredients in one portion, with weights and unit costs taken from invoices:
| Ingredient | Quantity | €/kg or €/u | Portion cost |
|---|---|---|---|
| Cod fillet | 180 g | 15.00 €/kg | 2.70 € |
| Potatoes (chips) | 250 g | 1.40 €/kg | 0.35 € |
| Batter (flour, beer) | q.b. | — | 0.30 € |
| Peas, tartare sauce | q.b. | — | 0.40 € |
| Oil, salt, lemon | q.b. | — | 0.25 € |
| Total | 4.00 € |
Now apply the formula, step by step:
- Add up the ingredient costs: 2.70 + 0.35 + 0.30 + 0.40 + 0.25 = 4.00 €
- Divide by the selling price: 4.00 ÷ 13.50 = 0.2963
- Multiply by 100: 0.2963 × 100 = 29.6%
The food cost of this fish and chips is 29.6%. The margin on raw ingredients is therefore 9.50 € per plate (13.50 − 4.00). A clean number that tells you exactly how hard that dish is working for you.
Example 2: Negroni at the bar
Not just dishes. A Negroni sold at the bar at 9.00 € (net of VAT) has its own food cost too, or rather its beverage cost. Same formula:
| Ingredient | Quantity | €/l or €/u | Portion cost |
|---|---|---|---|
| Gin | 30 ml | 25.00 €/l | 0.75 € |
| Red vermouth | 30 ml | 10.00 €/l | 0.30 € |
| Bitter | 30 ml | 15.00 €/l | 0.45 € |
| Orange slice | 1 u. | 0.10 €/u | 0.10 € |
| Ice | q.b. | — | 0.05 € |
| Total | 1.65 € |
Food cost = 1.65 ÷ 9.00 × 100 = 18.3%. The margin is 7.35 € per cocktail. A healthy number: on drinks you want to see a cost under 25%, ideally under 20%. It's one reason bars make more on cocktails than on coffee.
Example 3: pizza margherita
A margherita sold at 7.00 € (net of VAT), the classic neighbourhood dish:
| Ingredient | Quantity | €/kg or €/u | Portion cost |
|---|---|---|---|
| Flour | 250 g | 1.20 €/kg | 0.30 € |
| Yeast, salt | q.b. | — | 0.05 € |
| Tomato | 90 g | 2.80 €/kg | 0.25 € |
| Mozzarella fior di latte | 100 g | 7.00 €/kg | 0.70 € |
| Basil, oil | q.b. | — | 0.10 € |
| Total | 1.40 € |
Food cost = 1.40 ÷ 7.00 × 100 = 20%. Margin 5.60 € per pizza. In pizzerias, a margherita under 25% is normal and necessary: it's the gateway dish that carries the rest of the menu.
Benchmarks: what percentage is "healthy" in your segment
There's no single number that works for everyone. Typical ranges across small operators:
- Traditional restaurant: 28–35%. Starters tend to be lower (20–28%), meat and fish mains higher (35–45%).
- Pizzeria: 22–30%. The margherita below, specials with premium toppings above.
- Bar on food: 25–35% on sandwiches, toasts, daily plates.
- Bar on drinks: 10–20%. Coffee under 15%, cocktails in the range.
- Patisserie: 25–35%, depending on format (single pieces vs whole cakes).
If you want the numbers by segment with examples, there's a dedicated guide on the ideal food cost percentage.
Mind the flip side: a food cost that's too low isn't always a win. If you sell a margherita at 10%, you're probably using poor ingredients, or the price is so high the dish doesn't sell. The number to watch is always percentage times volume, never the percentage on its own.
Theoretical vs actual food cost
What you just calculated is the theoretical food cost: the one that "should be" based on the recipe. In the real world there's also the actual food cost, measured as:
Actual food cost % = (period usage ÷ period food revenue) × 100
Period usage = opening stock + purchases − closing stock. The gap between theoretical and actual is where the hole hides: kitchen waste, portions out of control, supplier shrinkage, scraps and, yes, theft too. If the gap stays above 2–3 points, it's an operational problem a menu price change won't solve.
Why it really matters
Plenty of operators glance at the till at the end of the day and think that's enough. But takings tell you nothing about your real margin. You can have a packed service and still make little, if the dishes that sold most had a high food cost.
Food cost shifts your attention to what counts: not "how much did I take", but "how much did I keep" on each dish. It's the only way to price a menu with any rigour, know which dishes actually make you money and which to rethink, and to catch it in time when a supplier bumps their prices and quietly eats into your margin.
The most common mistake: guessing by eye
Guessing by eye is the mistake that costs the most. "That dish is probably three or four euros of ingredients" is a sentence I've heard a thousand times, and it's almost always wrong. Here's where the real number slips out of view:
- The invisible ingredients. Oil, salt, spices, garnishes, the drizzle to finish. On their own they're a few cents, but on every plate they add up and move the percentage 2–3 points.
- Costs that change. The cod you were paying 12 €/kg now costs 15 (+25%). If you don't update the calculation, you still believe you have the margin from six months ago.
- Portions creeping up. Twenty grams extra per plate, times hundreds of covers a month, is real money walking out the door.
Guessing by eye is fine for a five-second gut check. For pricing a menu, it isn't. Six other common traps are listed in food cost mistakes that cost dear.
How to do it fast from your invoices
Calculating a single dish is easy. The problem starts when you have forty dishes on the menu, each with ten ingredients, and supplier prices change every month. Doing it all by hand, one spreadsheet after another, is the tedious part almost nobody manages to keep up to date. If you're starting from zero, the free food cost Excel template is a solid starting point: formulas ready to use, a worked example, download with no sign-up.
The fast method starts where the real numbers already live: your supplier invoices. That's where the actual, up-to-date price of each ingredient sits. From there you work out the cost per gram and apply it to the weights in your recipes. Done once, each dish's food cost updates itself every time a new invoice comes in. The same approach then lets you move into real menu engineering — popularity × margin — and decide what to push and what to drop.
If after all this you find your percentage is high, how to lower food cost without touching quality is the next step.
Try AFLUYO
Typing in every invoice by hand, working out the cost per gram, and recalculating each dish's food cost whenever prices change is a long, repetitive job. AFLUYO reads your real supplier invoices directly and automatically calculates the food cost and margin of every dish, keeping them up to date as prices move. Try it free for 14 days, no card.