In this article +
The short answer
Food cost % = (Opening stock + Purchases − Closing stock) ÷ Food sales × 100. Value stock at cost price, use food sales before GST, and use the same period for both. Purchases alone are not the same as consumption, because stock levels change between the start and end of the period.
The formula
Food cost % = Cost of food used ÷ Food sales × 100
where
Cost of food used = Opening stock + Purchases − Closing stock
That's it. Four numbers. Let's get each one right.
Step by step
Step 1: Opening stock
The value of all food stock on the first day of the period, at what you paid. Usually this is last period's closing stock.
Step 2: Purchases
All food purchases received during the period, at invoice price. Include everything that went into the kitchen: vegetables, dairy, meat, dry goods, oil, spices. Exclude cleaning supplies, packaging (unless you choose to include it consistently) and alcohol if you track it separately.
Step 3: Closing stock
Count and value everything left on the last day: store room, fridges, freezers, and prepped items on the line.
Step 4: Food sales
Total food revenue for the same period, before GST. If you separate beverages, separate their costs too.
Step 5: Divide
Food used ÷ Food sales × 100.
Worked example 1: A normal week
| ₹ | |
|---|---|
| Opening stock (Monday morning) | 42,000 |
| + Purchases during the week | 1,18,000 |
| − Closing stock (Sunday night) | 38,000 |
| = Food used | 1,22,000 |
| Food sales before GST | 3,90,000 |
| Food cost % | 31.3% |
Illustrative numbers.
Worked example 2: Why purchases ≠ consumption
Now imagine you bought a 50 kg rice sack and extra oil this week because the supplier offered a discount.
| Purchases-only method | Correct method | |
|---|---|---|
| Purchases | 1,48,000 | 1,48,000 |
| Opening stock | ignored | 42,000 |
| Closing stock | ignored | 68,000 |
| Food used | 1,48,000 | 1,22,000 |
| Food sales | 3,90,000 | 3,90,000 |
| Food cost % | 37.9% | 31.3% |
The purchases-only method says your kitchen got wasteful overnight. It didn't. You just stocked up. Next week, purchases-only will make you look like a genius, because you'll buy less while using the rice you already have. Only the stock-adjusted formula tells the truth.
The stock-up illusion
Week 1, purchases-only: "Chef, food cost is 38%! What happened?" Week 2: "Chef, 24%! Promotion!" Chef, who cooked exactly the same both weeks: quietly updates CV.
Common mistakes
- Using sales with GST. GST isn't your revenue. It inflates sales and makes food cost look lower.
- Valuing stock at selling price. Always cost price.
- Skipping the closing count. "Roughly the same as last week" is how errors hide.
- Different periods. Purchases for the month with sales for four weeks.
- Forgetting prepped items. Two buckets of gravy base are stock.
- Mixing food and beverages. Bar and drinks usually have very different cost profiles; track them separately.
- Ignoring staff meals and comps. Record them, so you can see their cost separately.
What's a "good" food cost percentage?
Many Indian restaurants operate in roughly the 25-35% range, but the right number depends on your format, menu and pricing. A dosa-and-coffee café and a seafood restaurant will never match. Track your own trend weekly, and investigate any jump of more than a couple of points.
Theoretical vs actual food cost
Once you have recipes costed, you can compare:
- Theoretical food cost: what food cost should be, based on recipes × plates sold.
- Actual food cost: what the formula above says.
The gap is variance, the money lost to waste, over-portioning, errors and theft. Our inventory management guide explains how to track it.
Do it in two minutes
Use our food cost calculator: enter opening stock, purchases, closing stock and sales, and it does the rest. It also includes a plate-cost calculator for pricing individual dishes.
Frequently asked questions
What is the formula for food cost percentage?
Food cost % = (Opening stock + Purchases − Closing stock) ÷ Food sales × 100.
Should food sales include GST?
No. Use food sales before GST.
Why can't I just divide purchases by sales?
Because stock levels change. If you stock up, purchases overstate what you used; if you run stock down, they understate it.
How often should I calculate food cost?
Weekly is ideal. Monthly is the minimum.
What is a good food cost percentage for restaurants in India?
It varies by format and menu. Many restaurants operate roughly between 25% and 35%. Focus on your own trend.
See it in your Kitchen.
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