Food cost percentage is the cost of the ingredients in a dish divided by its selling price, or, for a whole period, the value of stock used divided by food sales, expressed as a percentage. The period formula is opening stock plus purchases minus closing stock, divided by food sales, times 100. Indian restaurants commonly aim for 28 to 35 percent; delivery kitchens and quick-service formats run lower, and premium dining can run higher.
Why it matters
After rent and salaries it is the largest cost you control, and it drifts quietly. Waste, generous portions, a supplier raising the price of chicken by ₹20 a kilo, or a cook using ghee where the recipe says oil can move the number by three or four points, which is most of a small restaurant's net margin. Track it weekly for the whole kitchen and per dish for your top sellers. Restaurant food cost formula and calculator gives the worksheet.
Example
A chicken biryani sells at ₹280. The recipe costs ₹22 in rice, ₹65 in chicken, ₹18 in oil, ghee and spices, and ₹10 in onion and curd, so ₹115, a food cost of 41 percent, which is too high for a delivery dish once packaging and the rider are added. Raise the price to ₹320 and the number drops to 36 percent. Trim the chicken portion by 20 grams (₹8) and buy rice in 25 kg bags (₹4) and it reaches ₹103 on ₹320, or 32 percent. For the whole month: opening stock ₹40,000 plus purchases ₹2,10,000 minus closing stock ₹35,000 is ₹2,15,000 used, on food sales of ₹6,50,000, a food cost of 33 percent. Cloud kitchen profit margin shows where this number sits among the others.