Quick answer: Food cost percentage is the cost of the food you used in a period divided by your food sales for the same period, multiplied by 100. Work out the cost of food used as opening stock plus purchases minus closing stock, and use sales excluding VAT. Track it weekly, and compare your actual figure with the theoretical figure from your recipe costs.
If you only look at one kitchen number each week, make it food cost percentage. It tells you how much of every pound of food sales goes on ingredients, and it is usually the first place a problem shows up, whether that is a supplier price rise, over-portioning, waste or a till that is not capturing everything you serve. The maths is simple. Getting reliable inputs is the hard part, so this guide walks through the formula, a worked example, and the habits that keep the figure honest.
Key takeaways
- Food cost % = cost of food used ÷ food sales (excluding VAT) × 100.
- Cost of food used = opening stock + purchases − closing stock, for the same dates as your sales.
- Calculate sales net of VAT, because VAT is not your income. The standard rate applies to most eat-in catering, as set out in HMRC’s VAT notice 709/1.
- Compare actual food cost with theoretical (recipe) food cost; the gap shows waste, theft and portioning problems.
- Weekly stock counts beat monthly ones, because you can still act on what you find.
What is food cost percentage?
Food cost percentage (sometimes called food cost of sales, or the inverse of gross profit on food) shows the share of your food revenue that is spent on the ingredients used to earn it. If it is 30%, then 30p of every £1 of food sales went on ingredients and 70p is left as gross profit, before staff, rent, energy and everything else.
It is not a target to push as low as possible. A very low figure can mean tiny portions or cheap ingredients that guests notice. The aim is a figure that fits your concept, your menu prices and your margin goals, and that stays steady week to week.
What is the food cost percentage formula?
There are two calculations, and you need both.
1. Actual food cost percentage
Cost of food used = opening stock value + purchases during the period − closing stock value.
Food cost % = cost of food used ÷ food sales × 100.
2. Theoretical (or ideal) food cost percentage
This uses the recipe cost of each dish multiplied by the number sold. Add those up and divide by the sales of those dishes. It is what your food cost should have been if every portion matched the recipe and nothing was wasted, given away or lost.
Worked example: one week in a UK bistro
The figures below are invented purely to show the method. Swap in your own numbers.
| Line | Amount | How it is worked out |
|---|---|---|
| Opening stock (food) | £4,200 | Counted on Monday morning |
| Purchases during the week | £6,300 | Supplier invoices, net of VAT |
| Closing stock (food) | £4,500 | Counted the following Monday morning |
| Cost of food used | £6,000 | £4,200 + £6,300 − £4,500 |
| Food sales incl. VAT | £24,000 | From the till report |
| Food sales excl. VAT | £20,000 | £24,000 ÷ 1.2 at the 20% standard rate |
| Actual food cost % | 30% | £6,000 ÷ £20,000 × 100 |
Now suppose your recipe costs say the dishes sold should have cost £5,400. That is a theoretical food cost of 27% (£5,400 ÷ £20,000). The three-point gap, £600 that week, is the amount to investigate.
Why must you remove VAT from sales?
VAT you charge is collected on behalf of HMRC, so it is not revenue you keep. If you divide cost by VAT-inclusive sales, your percentage looks better than it really is. In the example above, using £24,000 would give 25% rather than 30%.
Most eat-in catering, hot takeaway food and hot drinks are standard-rated. HMRC’s catering, takeaway food and VAT guidance (Notice 709/1) explains the rules and confirms the temporary reduced rates ended on 31 March 2022. Check any unusual items, such as cold takeaway food, against that guidance or with your accountant. If you are preparing your VAT records digitally, our guide to Making Tax Digital for VAT covers what restaurants need to know.
What goes into cost of food used?
Be consistent about what counts. A clean food cost figure usually includes:
- Food and ingredient purchases that go into dishes, net of VAT and net of credit notes.
- Stock movements between the kitchen, bar and any other outlet, if you run more than one.
- Staff meals, if you want a true picture. Record them at cost rather than hiding them in food purchases.
- Waste and spoilage, which stays inside the figure because it is part of what you bought and used.
Keep drinks, packaging and cleaning supplies in separate categories so they do not distort the food figure. Wet and dry gross profit are usually reported separately.
How do you get accurate stock and purchase figures?
The formula is only as good as the counts behind it. A short routine helps:
- Count on the same day and time each week, ideally before service.
- Count in the same order, following the storage layout, so nothing is skipped.
- Record units consistently (kilos, portions, cases) and value them at your latest purchase price.
- Enter all supplier invoices and credit notes before you calculate.
- Have a second person spot-check high-value items such as meat, fish and spirits.
A system that links purchases, recipes and sales takes much of the manual effort out of this. WebStocks supports recipe-level stock, so each dish sold can reduce the underlying ingredients automatically, which makes a theoretical figure available without a spreadsheet. If you want to go deeper on the waste side, see our article on reducing food waste with recipe costing.
Why does actual food cost differ from theoretical?
A gap is normal, and a small one is not alarming. A persistent or growing one points to a cause. Common ones are:
| Possible cause | What it looks like | What to check |
|---|---|---|
| Over-portioning | Actual is higher on a few popular dishes | Portion weights and scoops against the recipe card |
| Waste and spoilage | Gap rises after quiet days or menu changes | Waste log, ordering levels, prep quantities |
| Unrecorded giveaways | Gap with no clear dish pattern | Comps, voids and staff meals in the till |
| Supplier price changes | Both costs rise, recipe costs out of date | Update recipe costs when invoices change |
| Receiving errors | Short deliveries or substitutions | Check deliveries against the order and invoice |
| Till or stock mismatches | Items sold but not deducted | Menu items linked to recipes in your POS |
The WRAP report on the true cost of waste in hospitality and food service is a useful reminder of why this matters. It estimated that the UK sector wasted the equivalent of 1.3 billion meals a year, at a cost of about £2.5 billion (see The Caterer’s summary). The report is from 2013, so treat the figures as a guide to scale rather than a current benchmark.
How often should you calculate it?
Weekly is a good rhythm for most kitchens. Monthly figures arrive too late to correct a problem, and daily counts are usually only worthwhile for high-value items. Many owners do a full count weekly and a quick check of expensive lines midweek.
Look at the trend over several weeks rather than any single result, because stock timing and big deliveries can swing one week. A dashboard that shows sales and costs side by side makes it easier to spot drift early, including across several sites with chain management tools.
What can you do if your food cost is too high?
- Re-cost your recipes using current invoice prices, then check your menu prices still deliver the margin you want.
- Review portion sizes and standardise them with scales, scoops and photos.
- Look at your menu mix: promote dishes with a healthy margin and re-think those that sell a lot but earn little.
- Tighten ordering to par levels and reduce over-prep.
- Check supplier prices and consider whether alternatives or specifications could help, without compromising quality.
- Review comps, voids and staff meals, and make sure they are recorded.
If you want to see how recipe costing and stock sit alongside sales and reporting, you can book a free demo or start a 14-day free trial.
Frequently asked questions
What is a good food cost percentage for a restaurant?
It depends on your concept, menu and pricing, so there is no single right number. Rather than copying a general benchmark, set a target based on your recipe costs and menu prices, and watch the trend. A steady figure close to your theoretical cost is a good sign.
Should food cost percentage include VAT?
No. Use food sales excluding VAT and purchases excluding VAT. VAT is collected for HMRC and is not part of your income, so including it makes your percentage look better than it really is.
What is the difference between food cost and gross profit?
They are two sides of the same figure. If food cost is 30% of sales, food gross profit is 70%. Gross profit is before staff, rent, energy and other overheads.
How do I calculate food cost for a single dish?
Add up the cost of every ingredient in one portion, including trim and cooking loss, then divide by the menu price excluding VAT and multiply by 100. For example, a £4.50 portion cost on a dish sold at £15.00 excluding VAT is 30%.
Why is my actual food cost higher than my recipe cost?
Usual reasons are over-portioning, waste, unrecorded giveaways, out-of-date recipe costs and stock counting errors. Compare dish by dish and check your waste, comps and voids to find where the gap starts.