Food Cost Percentage: The Number Every Menu Needs
A practical guide to calculating food cost percentage, reading the result, and turning it into better menu decisions.
Food cost percentage tells you how much of a selling price is consumed by ingredients and packaging. It is simple, but it is also where many restaurants discover that a popular dish is quietly eating the profit of the whole menu.
The formula
Food cost percentage = item cost / selling price x 100. If a sandwich costs 2.40 to produce and sells for 8.00, the food cost percentage is 30%.
The hard part is not the math. The hard part is trusting the item cost. You need current supplier prices, correct yields, packaging, waste assumptions, and sub-recipes such as sauces, doughs, fillings, or prep batches.
What a good percentage looks like
There is no universal perfect number. A coffee drink, croissant, burger, tasting menu, and delivery bowl all carry different labor, rent, packaging, and customer expectations.
A better question is: does this item hit the margin your business needs after fixed costs and labor reality? Karu is designed around that question, not around a generic benchmark.
Where operators get it wrong
Most mistakes come from stale prices and missing components. Butter changes, flour changes, packaging changes, and the old spreadsheet still says the dish is fine.
Another common mistake is costing only the final plate while ignoring prep recipes. If garlic mayo is used by six products, every one of those products inherits the cost of that sub-recipe.
Operator checklist
Use latest supplier prices, not last month's memory.
Include packaging for takeaway and delivery items.
Cost sub-recipes once, then reuse them across products.
Review high-volume products first because small errors scale quickly.