The food cost formula is the one piece of restaurant maths every owner should be able to do on the back of a supplier invoice. Food cost percentage equals the cost of the food you used in a period, divided by the food sales in that period, multiplied by 100. Used, not bought: what you purchased minus what is still on the shelf. If you used ₹2,40,000 of ingredients to make ₹8,00,000 of sales, your food cost is 30 percent.
This post gives you the formula, a fill-in calculator you can copy into a notebook or a spreadsheet, a second formula for costing a single dish, and a short list of what to check when the number is higher than you want.
The food cost percentage formula
There are two versions. The first is the one for a period, usually a week or a month.
Food cost percentage = (Opening stock + Purchases − Closing stock) ÷ Food sales × 100
Opening stock is the value of ingredients on hand at the start of the period. Purchases are everything you bought during it, from the invoices. Closing stock is what is on hand at the end, from a count. Food sales are sales of food only, excluding GST and excluding drinks if you track beverage cost separately. The top line of the fraction is called cost of goods used, and it is the number that catches spoilage and theft, because food that went in the bin was still purchased.
The second version is per dish, used for pricing and menu decisions.
Dish food cost percentage = Ingredient cost of one portion ÷ Selling price of that portion × 100
Both matter. The period formula tells you how the kitchen is running. The dish formula tells you whether each item is priced right.
Food cost calculator: a worked month
Fill the table with your own numbers. The example is a small North Indian restaurant over one month.
| Line | What to enter | Example |
|---|---|---|
| A. Opening stock | Value of ingredients at the start, from the last count | ₹65,000 |
| B. Purchases | Total of all food supplier invoices in the month | ₹2,55,000 |
| C. Closing stock | Value of ingredients at the end, from this count | ₹72,000 |
| D. Cost of goods used | A + B − C | ₹2,48,000 |
| E. Food sales | Food sales for the month, excluding GST | ₹8,00,000 |
| F. Food cost percentage | D ÷ E × 100 | 31 percent |
Two things people get wrong. Using purchases alone as the top line (B ÷ E) ignores stock changes, so a big delivery on the last day of the month makes food cost look terrible and the next month look great. And using sales including GST on the bottom line makes food cost look better than it is. Strip the tax out first. The stock counts the formula depends on are covered in our guide to restaurant inventory management for small kitchens.
Recipe costing: one dish at a time
To cost a dish, list every ingredient in one portion, the quantity, and the cost of that quantity at what you paid. Include the things people forget: oil, ghee, salt, the garnish, the raita on the side, and the packaging if it is a delivery item. The table shows a chicken biryani.
| Ingredient | Quantity per portion | Cost |
|---|---|---|
| Chicken (curry cut) | 220 g | ₹55 |
| Basmati rice | 150 g | ₹18 |
| Onions, tomatoes, ginger, garlic | mixed | ₹10 |
| Curd, ghee, oil | mixed | ₹14 |
| Spices, saffron, herbs | mixed | ₹12 |
| Raita and salan on the side | 1 serving each | ₹12 |
| Delivery container and bag | 1 set | ₹14 |
| Total ingredient cost | ₹135 |
At a selling price of ₹320, that is 135 ÷ 320 × 100, or about 42 percent for the delivery version, and about 38 percent for dine-in without the packaging. If your target for mains is 32 percent, the biryani is either underpriced, over-portioned or both. The price that hits 32 percent with the packaging is ₹135 ÷ 0.32, about ₹420; or you reduce the chicken to 180 g and the packaging to a cheaper set and see where it lands. These per-dish decisions are the input to the matrix in our guide to menu engineering and pricing.
Pricing from a target food cost
The reverse calculation is useful when adding a dish. Selling price = ingredient cost ÷ target food cost. A ₹60 plate of paneer tikka at a 30 percent target should sell at ₹200. Round to what the menu and the market will bear, then check the margin you actually got.
What a good food cost percentage looks like
There is no single right number. Fine dining with imported ingredients runs higher; a dal-roti canteen runs lower. Many Indian restaurants aim somewhere between the high twenties and mid thirties overall, with mains higher and beverages and desserts lower. The useful target is your own number, set from your menu, and then held stable.
The channel changes the maths too. An order on the delivery apps carries a commission commonly in the 18 to 30 percent range on top of food cost, so a 32 percent dish becomes a thin margin or a loss once commission, packaging and discounts are counted. The same dish ordered directly on WhatsApp carries only the payment gateway charge and whatever the ordering platform costs per order. Our post on restaurant profit margins with and without aggregators works through the full picture.
When the number is too high: a checklist
- Count again. A wrong closing stock is the most common cause of a scary month. Recount Tier A items and check that open packets were estimated the same way as last time.
- Check the invoices against deliveries. Short weights and price creep on chicken, paneer and oil add up. Weigh what comes in.
- Look at the waste log. Spoiled vegetables and over-prepped curries are purchases that never became sales.
- Weigh five portions of your top three dishes. Over-portioning by 20 percent on your best seller is a food cost problem nobody notices.
- Check prices against costs. If chicken rose ₹30 a kilo and the biryani did not move, the formula is working correctly; the menu is wrong.
- Check wrong orders and remakes. Every remade order is cooked twice and sold once. The fixes are in our post on reducing order errors.
- Check staff meals and free items. Record them. They are legitimate, but they belong in a separate line, not hidden in food cost.
Getting the sales number without extra work
The bottom line of the formula, food sales excluding tax, should come from your billing or ordering system, not from adding up a notebook. For direct orders, an ordering platform's dashboard shows revenue by day and by item, which also gives you the units sold you need for per-dish analysis. On Tezzu, for example, the live dashboard shows orders, revenue and item-level sales for everything that comes through your WhatsApp number and store page, and the cost side is simple to add to the maths: a flat ₹10 per order and no commission, so the direct channel's cost per order is known before you start. Our guide to a restaurant order management system covers what else the dashboard should give you.
Know your cost per order before you cost the dish
Direct orders on Tezzu cost a flat ₹10 each with no commission, so the channel cost in your food cost maths is a known number.
See pricingFrequently asked questions
What is the formula for food cost percentage?
Food cost percentage equals cost of goods used divided by food sales, times 100, where cost of goods used is opening stock plus purchases minus closing stock. Use food sales excluding GST. For a single dish, divide the ingredient cost of one portion by its selling price and multiply by 100.
How do I calculate the food cost of a recipe?
List every ingredient in one portion with its quantity and the cost of that quantity at your purchase price, including oil, garnish, sides and packaging for delivery items. Add them up for the portion cost, then divide by the selling price for the dish's food cost percentage. Re-check it whenever a main ingredient price moves.
What is a good food cost percentage for a restaurant in India?
It varies with cuisine and format. Many restaurants aim somewhere between the high twenties and mid thirties overall, with mains higher and drinks and desserts lower. A stable number you can explain matters more than hitting a textbook figure, and aggregator commission changes the margin picture for those orders.
Why is my food cost high even though prices have not changed?
The usual causes are a wrong stock count, spoilage and over-prepping, over-portioning on best sellers, short-weight deliveries, remade orders and unrecorded staff meals. Work through them in that order; a recount and a week of weighing portions usually finds the gap.