What is a good food cost percentage for a restaurant?

For most full-service restaurants, a food cost percentage between 28% and 35% is considered healthy. Fast-casual and counter service restaurants often run 25–30% because portion sizes and waste are more controlled. Fine dining typically runs 25–35% but compensates with higher average check sizes. Bakeries and cafes often target 25–30% because baked goods have predictable ingredient lists. The right target for any business depends on its labor percentage and overhead; food cost cannot be evaluated in isolation.

What is the formula for food cost percentage?

Food cost percentage = (ingredient cost per portion ÷ selling price) × 100. For example, if a burger uses $3.50 in ingredients and sells for $13, the food cost percentage is (3.50 ÷ 13) × 100 = 26.9%. The inverse — the amount left after ingredients — is the gross margin: 73.1% in this case.

What is the difference between food cost percentage and actual food cost?

Theoretical food cost percentage is calculated from your recipes — it assumes perfect portioning, no waste, and no spoilage. Actual food cost percentage is calculated from what you actually spent on food against what you sold, usually measured by taking inventory at the start and end of a period. The gap between theoretical and actual — commonly 2–5 percentage points in a well-run kitchen — represents waste, over-portioning, theft, and comps.

How do you lower food cost percentage?

The five most effective levers are: (1) reprice underpriced dishes so the selling price reflects current ingredient costs; (2) reduce portion sizes slightly on high-cost items without changing the perceived value; (3) engineer the menu so you sell more of your high-margin items; (4) reduce waste through better prep scheduling and portion control; (5) negotiate supplier contracts or change suppliers for your highest-volume ingredients. Repricing is usually the fastest lever — it requires no operational change and takes effect immediately.

What Is Food Cost Percentage? Definition, Formula, and Targets (2026)

Food cost percentage is the share of a menu item's selling price that goes to ingredients. It is one number that tells you whether your prices are working — and every restaurant operator should know how to calculate it.

Food cost percentage: the definition

Food cost percentage measures how much of your menu price is consumed by ingredients. If you sell a burger for $14 and the ingredients cost $4, you kept $10 — a food cost percentage of 28.6%.

It is expressed as a percentage rather than a dollar amount because that makes it comparable across dishes of different prices, across different-sized restaurants, and across time periods as your menu evolves.

Food Cost % = (Ingredient Cost ÷ Menu Price) × 100

Ingredient cost: $4.00

Menu price: $14.00

($4 ÷ $14) × 100 = 28.6% food cost

Gross margin: 71.4%

Food cost percentage and gross margin always sum to 100%. A 28% food cost = 72% gross margin. Both describe the same dish — one from the cost side, one from the revenue side.

What counts as “ingredient cost”

Ingredient cost is every consumable that goes into the dish as it leaves your kitchen: the protein, the vegetables, sauces, oils, garnishes, and the container or paper if it is a takeaway item. It does not include labor, utilities, or overhead — those are accounted for separately in prime cost and contribution margin analysis.

Ingredient cost should reflect the portion size you actually serve, not the package size you buy. A chicken breast may cost $6 per pound on invoice, but if your portion is 6 oz after trimming (a yield loss), the cost per portion is:

$6/lb ÷ 16 oz × 6 oz served = $2.25 per portion

Always cost to the portion served, not the raw purchase unit.

Target food cost percentages by restaurant type

There is no universal target — the right number depends on your concept, average check size, and how your labor cost balances against it.

Restaurant Type	Typical Target Range	Why
Full-service restaurant	28–35%	Higher check size supports more ingredient cost per dish
Fast-casual / counter service	25–30%	Lower labor cost allows tighter food cost targets
Fine dining	25–35%	Premium ingredients offset by high average check
Bakery / café	25–30%	Predictable batch costs and strong markup on beverages
Food truck	28–35%	Simplified menu limits waste; lower overhead than a brick-and-mortar
Catering	25–35%	Varies with event size and fixed-price packaging
Bar / pub (food)	25–30%	Beverage margin subsidizes tighter food cost targets

These are benchmarks, not rules. A bakery running at 35% is not automatically in trouble if its labor cost is 20%. Evaluate food cost in the context of your full cost structure, not as a standalone number.

Theoretical vs. actual food cost percentage

There are two versions of food cost percentage, and the gap between them is one of the most useful numbers in restaurant management.

Theoretical food cost %

Calculated from your recipes. Assumes every dish is made exactly to spec — correct portion sizes, no waste, no spoilage. This is the best you could possibly do.

Actual food cost %

Calculated from your purchases and inventory. Uses: (Opening inventory + Purchases − Closing inventory) ÷ Sales. This reflects reality — including waste, spoilage, over-portioning, comps, and theft.

A gap of 1–3 percentage points between theoretical and actual is normal in a well-run kitchen. Consistently more than 4–5 points suggests a portioning problem, a waste problem, or a shrinkage issue worth investigating.

How to lower your food cost percentage

In order of typical impact:

Reprice underpriced dishes. If your ingredient costs have risen since you last set prices, the fastest fix is raising prices rather than cutting portions. A dish that ran at 28% two years ago may be at 38% today if you have not repriced it.
Tighten portion sizes on high-cost items. A 10% reduction in protein portion size is often invisible to guests but drops cost per dish meaningfully.
Engineer your menu toward high-margin items. Promote dishes with low food cost percentage, position them well, and make the high-cost items less prominent.
Reduce prep waste. Better forecasting and prep scheduling reduce the gap between theoretical and actual food cost.
Renegotiate your highest-volume ingredients. For a restaurant, the top five ingredients by spend typically represent 60–70% of total food cost. A 5% reduction on those five has more impact than optimizing everything else combined.

Food cost percentage vs. prime cost

Food cost percentage only tells half the story. The other half is labor. Prime cost — food cost plus labor cost — is the number that more accurately reflects whether a restaurant is viable.

Prime cost guideline

Prime Cost = Food Cost % + Labor Cost %

A prime cost below 60% is generally sustainable for a full-service restaurant. Below 55% is healthy. Above 65% and the remaining 35% has to cover rent, utilities, marketing, and everything else — leaving very little margin.

This is why a food cost percentage of 35% is not automatically a problem if your labor cost is 25% (prime cost of 60%), but a food cost of 30% is still a problem if your labor is 40% (prime cost of 70%).

What Is Food Cost Percentage?