Food Cost: The Foundation of Restaurant Profitability
Food cost is the ratio of a dish's production cost to its selling price — the most decisive metric of restaurant profitability. The industry-accepted ideal food cost ratio ranges between 28-35%.
How to Calculate Food Cost
Basic formula: Food Cost % = (Raw Material Cost / Selling Price) x 100
Ways to Lower Food Cost
Menu Pricing Strategy
Food cost is your starting point for pricing, but you must also factor in prime cost (food + labor), which shouldn't exceed 60-65% of total sales.
My Consulting Approach
In many projects, food cost optimization alone has achieved 5-12% cost reductions through recipe re-costing, waste source identification, and supply agreement renegotiation.
