The food cost percentage formula
Food cost % = (cost of ingredients per serving ÷ selling price per serving) × 100If a slice of cake costs $1.20 in ingredients and sells for $4.00, its food cost is 1.20 ÷ 4.00 × 100 = 30%. Thirty cents of every dollar you take goes back out on ingredients; the other seventy has to cover everything else and leave a profit.
A worked example
A batch of 24 chocolate chip cookies uses these ingredients:
| Ingredient | Pack bought | Used | Cost |
|---|---|---|---|
| All-purpose flour | 2 kg for $3.20 | 280 g | $0.45 |
| Butter | 454 g for $4.99 | 225 g | $2.47 |
| Brown sugar | 907 g for $2.79 | 200 g | $0.62 |
| Eggs | 12 for $4.20 | 2 | $0.70 |
| Vanilla extract | 2 fl oz for $6.49 | 2 tsp | $1.08 |
| Chocolate chips | 340 g for $3.99 | 340 g | $3.99 |
| Oven time and 24 bags | $1.50 | ||
| Batch total | $10.81 |
That is $10.81 ÷ 24 = $0.45 a cookie. Sold at $1.50 each, the food cost is 0.45 ÷ 1.50 × 100 = 30%.
What is a good food cost percentage?
There is no single right number. A common rule of thumb for restaurants is somewhere around 25–35%, but what works for you depends on everything else you pay for:
- Labour-heavy items such as decorated cakes or hand-made dumplings can need a lower food cost, because more of the price has to pay for your time.
- Premium ingredients such as saffron, good chocolate or seafood often run higher, and the price people will pay sets the limit.
- Selling from home usually means lower rent and overheads than a shop, which gives you more room.
The useful thing is to know the figure for each item, so you can see which ones carry the business and which ones quietly cost you.
How to lower your food cost
- Price from real costs. Check each recipe against what you paid on your last receipts, not what you remember paying.
- Buy the pack size that suits you. A bigger bag is cheaper per gram, but only if you use it before it goes off.
- Weigh, don't scoop. Portions that drift upwards raise your cost per serving without anyone noticing.
- Count the extras. Boxes, liners, labels and oven time are part of the cost of every item.
- Re-cost when prices move. Butter and chocolate prices change; a price that was right last year may not be now.
Already know your cost per serving? The recipe price calculator works the other way, from a target food cost to a selling price.