Optimize menu pricing and track food costs for maximum restaurant profitability and inventory management.
Enter your inventory and sales data to determine your food cost percentage and profit margins.
Food cost percentage measures the ratio of food costs to food sales revenue. It's one of the most critical metrics in restaurant management, showing how efficiently you're using ingredients and pricing your menu items.
Food Cost % = (COGS ÷ Food Sales) × 100
Where COGS (Cost of Goods Sold) = Beginning Inventory + Purchases - Ending Inventory
Excellent (25-28%): Fast food, high volume
Good (28-32%): Casual dining
Acceptable (32-35%): Fine dining
High (35%+): Needs optimization
Monitoring food cost percentage helps identify waste, theft, over-portioning, and pricing issues. Regular tracking enables data-driven decisions about menu engineering, supplier negotiations, and operational improvements.
Calculate your food cost percentage at least monthly. High-volume restaurants or those with perishable inventory should calculate weekly. This frequency allows you to spot trends, identify issues quickly, and make timely adjustments to maintain profitability.
Include all food and ingredients used in menu preparation: proteins, produce, dry goods, dairy, and frozen items. Typically exclude beverages (they have their own cost calculations), cleaning supplies, and paper goods. Count everything systematically at the same time each period.
Key strategies include: reducing portion sizes, minimizing waste, negotiating better supplier prices, using seasonal ingredients, cross-utilizing ingredients across multiple dishes, improving inventory management, training staff on proper portioning, and adjusting menu prices strategically.
No, calculate beverage costs separately as they typically have different profit margins. Alcoholic beverages often have 18-24% cost percentages, while non-alcoholic beverages can be as low as 10-15%. Mixing them with food costs obscures important insights.
First, verify your numbers are accurate. Then investigate: Are portions too large? Is there excessive waste or spoilage? Are prices outdated? Is theft occurring? Are you getting competitive supplier pricing? Each problem has specific solutions - track your costs by category to pinpoint issues.
Many restaurants use a 3x markup rule: if a dish costs $5 in ingredients, charge $15 to achieve a 33% food cost. However, this varies by restaurant type, location, and concept. Fine dining may accept higher food costs for premium ingredients, while quick service aims for lower percentages through efficiency.
Break down food costs by protein, produce, dairy, etc. This reveals which categories need attention and helps you negotiate better with specific suppliers.
Accurate inventory is crucial. Schedule counts at the same time each period, train staff properly, and use a consistent method (FIFO - First In, First Out).
Analyze each menu item's profitability and popularity. Promote high-profit items, re-engineer or remove money-losers, and adjust pricing strategically.
Use standardized recipes, proper measuring tools, and regular training. A few extra ounces per dish multiplied across hundreds of servings significantly impacts costs.
Implement proper storage, train staff on handling perishables, create specials from aging inventory, and track waste daily to identify patterns.
Compare pricing regularly, consider alternative suppliers, buy seasonal produce, and negotiate volume discounts. Build relationships for better terms.