Food Cost Percentage Explained (and what to aim for)

Start with the foundation: food cost percentage. When you understand your food cost % (and what a realistic target looks like for your type of restaurant), you stop guessing — and you can spot problems fast: a dish that’s popular but bleeding money, portions that drift, or a price that’s too low for the prep time.

Food cost percentage is simply the share of your food revenue that goes to ingredients. Lightspeed defines it as the value of food costs to revenue expressed as a percentage, and shows the classic COGS-based formula using inventory, purchases, and sales. Lightspeed+1

Food cost % answers one question: “Out of every $100 I sell, how many dollars are spent on ingredients?” If it’s 32%, then about $32 goes to ingredients and about $68 is left to cover labor, rent, utilities, fees, waste, and profit.

What it doesn’t measure: labor time, kitchen complexity, or whether a dish is “worth it” operationally. That’s why food cost % must be used together with pricing strategy and menu engineering (we’ll link those below).

This is the “management” version — it’s great for weekly/monthly control.

COGS = Beginning inventory + Purchases − Ending inventory (NetSuite uses this exact COGS formula for restaurant food costs). NetSuite

Food cost % = (COGS ÷ Food sales) × 100 (Lightspeed shows the same logic when dividing food cost into total food sales). Lightspeed+1

If you want a step-by-step walkthrough (and examples), here’s a solid reference you can link to: Lightspeed — How to calculate food cost percentage Lightspeed

This is the “menu” version — it’s what you use to price and fix individual items.

Food cost % per dish = (Ingredient cost per portion ÷ Selling price) × 100 (Lightspeed includes this basic per-item formula in its FAQs).

This is the number that reveals the classic problem: a best-seller that looks busy but quietly drains profit.

When you’re ready to turn plate-cost into real pricing decisions, jump to:Internal: How to Price a Dish: Cost + Margin + Psychology NetSuite

A widely used benchmark is 28–35%, but it depends on concept, menu style, and overhead. Lightspeed notes that many operators aim for 28–35% of revenue, while also stressing that there’s no single perfect number.

A simple way to think about targets:

High ingredient concepts (steakhouse, seafood, premium proteins) often run higher % and rely on strong pricing and volume.

Lower ingredient concepts (pasta-focused, bowls, bakery/sandwich) can run lower %, but they still lose money if portions drift or waste is high.

What matters most: your target must fit your business model, not a generic number.

If you want more context around how food cost % connects to pricing, NetSuite also explains calculating pricing using ideal food cost percentage and shows the item-level formula. NetSuite — Restaurant menu pricing strategies NetSuite

Food cost % is useful — but profit decisions get clearer when you also look at contribution margin:

Contribution margin = selling price − standard food cost

OpenTextBC explains this definition and why it matters: it’s the money left to pay labor and other costs, and ultimately profit. BCcampus Open Publishing+1

This is why two items can both “look fine” by food cost %, but one is still the better business choice because it leaves more dollars behind.

OpenTextBC — Principles of Menu Engineering (Contribution Margin) BCcampus Open Publishing

And when you’re ready to identify and push the items that are both popular and profitable, go here: Engineering Your “Star” Items (high profit + high sales) Toast POS+1

Once you track food cost % consistently, the pattern tells you where to look:

Common causes:

supplier price increase (you didn’t update recipe costing)

waste/spoilage increased

portion drift (line cooks “heavy hand” the protein)

theft / untracked comps

promo or delivery mix changed (fees don’t change food cost, but can change your pricing behavior)

A spike is a signal — not a verdict. You diagnose by checking which items moved and what changed operationally.

This is also where portion control becomes the hidden profit lever: Portion Control: The Hidden Key to Better Profit

That usually means:

labor is too high for the menu complexity

prices are too low for prep time and service load

your sales mix is heavy in low-margin “comfort” items

In that case, food cost % is only half the story — you need pricing structure + menu engineering decisions. Start with: The Most Common Pricing Mistakes Restaurants Make

Here’s a simple process you can repeat weekly/monthly:

Weekly (30–45 minutes)

update costs for your top 10 ingredients

re-check plate cost on your top 10 selling dishes

flag anything that moved your per-item food cost % by ~2–3 points

Monthly (60–90 minutes)

calculate overall COGS-based food cost % for the month (inventory + purchases − ending inventory) NetSuite+1

compare vs last month (and same month last year if you can)

pick 3 actions only (price update, portion fix, recipe tweak, supplier swap)

Quarterly

run menu engineering and redesign around what sells and what profits Engineering Your “Star” Items (high profit + high sales)

Standardize the costly part of the dish (protein weight, cheese grams, sauce ladle).

Trim “silent costs” (garnishes, sides, packaging) — Lightspeed notes some operators use COGS thinking down to small items like garnishes/packaging in inventory usage.

Fix one item first: your best-selling dish. If it’s underpriced, your whole restaurant feels it.

If your strategy includes bundles, learn how to design combos that protect margin (not destroy it): How to Build a Profitable Combo / Meal Deal