The Food Cost Percentage

The Food Cost Percentage is a metric used by restaurants and food businesses to measure how much of their sales revenue is spent on ingredients and food supplies. It’s calculated by dividing the cost of the ingredients used by the total sales revenue, then multiplying by 100 to get a percentage. For example, if a restaurant earns $1,000 and spends $300 on ingredients, the food cost percentage is 30%. Maintaining a healthy food cost percentage helps ensure the business remains profitable while offering quality food, guiding purchasing decisions and pricing strategies.