Profit Margin CalcKnow what you keep

Restaurant math

Food cost calculator

Food cost percentage is the cost of food sold divided by food sales. Cost of food sold is beginning inventory plus purchases, minus ending inventory and employee meals: $22,500 used on $75,000 of sales is a 30.0% food cost. A menu price is the plate cost divided by your target food cost.

Profit Margin Calc editorial teamUpdated 3 sources

Calculator 15

Food cost percentage

One period: a week or a month, from your inventory counts

Try:

Food

$
$
$
$

Sales and labor

$
$
Food cost percentage30.0%cost of food sold ÷ food sales
Cost of food sold$22,500this period
Gross profit on food$52,50070.0% of food sales
Prime cost59.3%food 30.0% + labor 29.3%

With $22,500 of food used and $75,000 of food sales, your food cost is 30.0%; with $22,000 of labor, prime cost is 59.3% of sales.

Beginning inventory$8,000.00
+ Purchases$22,000
Food available for sale$30,000
− Ending inventory$7,000.00
− Employee meals$500.00
Cost of food sold$22,500
Where each dollar of food sales goes
  • Food cost 30.0%
  • Labor 29.3%
  • Left for everything else 40.7%

Formula. Cost of food sold = beginning inventory + purchases − ending inventory − employee meals. Food cost % = cost of food sold ÷ food sales. Labor cost % = labor ÷ sales. Prime cost % = (cost of food sold + labor) ÷ sales.

Food cost percentage formula

Food cost percentage is the share of food sales spent on the food that was actually used, so it starts from inventory counts, not from purchases alone.[1]

Cost of food sold=Beginning inventory + Purchases − Ending inventory − Employee meals
Food cost %=Cost of food soldFood salesExample: $22,500 ÷ $75,000 = 30.0%

The inventory part is the same calculation the IRS uses for cost of goods sold: inventory at the start of the year plus purchases, minus inventory at the end.[2] Using purchases alone overstates food cost in a month when you stock up and understates it in a month when you use up the shelves.

Step by step

  1. Beginning inventory: the value of food on hand at the start of the period. It is last period's ending count.
  2. Add purchases for the period to get food available for sale: $8,000 + $22,000 = $30,000.
  3. Subtract ending inventory from a physical count: $30,000 − $7,000 = $23,000.
  4. Subtract employee meals. Dopson and Hayes treat staff meals as a labor benefit, not a food cost, so they come out: $23,000 − $500 = $22,500.[1]
  5. Divide by food sales: $22,500 ÷ $75,000 = 30.0%.

Count, do not estimateThe beginning and ending figures must come from a physical count priced at what you paid. An estimated ending inventory makes the food cost percentage a guess.

To price a dish for a target food cost, divide the plate cost by the target percentage: a $4.20 plate at 30% needs $14.00, or $14.99 rounded to .99.

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Menu price

Plate (recipe) cost and the food cost you aim for

Try:
$
%
Round the price
Menu price$14.99exact $14.00
Food cost at that price28.0%target 30.0%
Gross profit per plate$10.79
Markup on plate cost257%

A $4.20 plate at a 30% target food cost needs a $14.00 menu price ($14.99 rounded up), leaving $10.79 per plate for labor, overhead and profit.

Formula. Menu price = plate cost ÷ target food cost %. Rounding always goes up, so the food cost stays at or below the target.

Target food cost and markup are two views of the same price. A 30% food cost is a markup of 233% on the plate cost, and a gross margin of 70% on the dish before labor and overhead.[3] The margin vs markup guide converts between them, and the markup calculator works from the cost side.

Menu price by target food cost
DishPlate cost25%30%35%
Side salad$2.50$10.00$8.33$7.14
Burger and fries$4.20$16.80$14.00$12.00
Pasta with shrimp$6.80$27.20$22.67$19.43
Steak plate$11.50$46.00$38.33$32.86

Labor cost percentage and prime cost

Labor cost percentage is labor divided by sales, and prime cost is food cost plus labor cost, the two largest costs a restaurant controls week to week. In the example, $22,000 of labor on $75,000 of sales is 29.3%, and prime cost is 59.3% of sales, leaving 40.7% for rent, utilities, other costs and profit.

Use the same period and the same sales figure for both percentages. If staff meals are moved out of food cost, they belong in labor, so the prime cost does not change.

Why food cost moves

  • Waste and spoilage are inside cost of food sold: food that was bought and is no longer on the shelf is counted as used, whether it was sold or thrown away.[1]
  • Portion drift: a few extra fries per plate raise the actual plate cost above the recipe cost.
  • Price changes: when suppliers raise prices, recost the recipes and update menu prices; the price increase calculator shows how many sales you can lose before a higher price earns less.
  • Menu mix: selling more of your high-cost dishes raises the overall percentage even when every recipe is on target.

For the full profit picture after labor and overhead, enter the totals in the net profit margin calculator.

Frequently asked questions

How do you calculate food cost percentage?

Add beginning inventory and purchases, subtract ending inventory (and employee meals), then divide by food sales. $22,500 of food used on $75,000 of sales is 30.0%.

How do I price a menu item from food cost?

Divide the plate cost by your target food cost percentage. A $4.20 plate at a 30% target is $14.00.

What is prime cost?

Prime cost is cost of food (and beverage) sold plus labor. As a percentage, divide it by sales for the same period.

Should employee meals count as food cost?

In Dopson and Hayes' method they are subtracted from food cost and treated as a labor-related cost, because free or discounted meals are an employee benefit.

Sources

  1. Food and Beverage Cost Control, Chapter 5: Monitoring Food and Beverage Product Costs (cost of food sold, food cost percentage) · Lea R. Dopson and David K. Hayes, Wiley; course reading hosted by the Auguste Escoffier School of Culinary Arts, accessed 2026-11-14
  2. Publication 334, Tax Guide for Small Business (chapters 6 and 7: cost of goods sold and gross profit) · Internal Revenue Service, reviewed April 30, 2026
  3. Principles of Marketing, 18.3 Retailing Strategy Decisions (markup and gross margin) · OpenStax, Rice University, 2023