How to calculate food cost percentage

The formula

Food cost percentage = ingredient cost ÷ menu price, expressed as a percentage. A dish that costs ₱70 in ingredients and sells for ₱280 has a food cost of 25% — ₱70 ÷ ₱280.

What actually counts as ingredient cost

What you paid, portioned to what the dish actually uses — not the retail price of a whole unit. If chicken costs ₱220 a kilo and the dish uses 100g, the ingredient cost for that dish is ₱22, not ₱220.

Waste and trim belong in that portioned figure too. If a fifth of a fish is discarded before it reaches the plate, the usable portion carries that cost — the 20% that becomes waste is not free just because it never reaches a guest.

A full dish, worked through

A grilled fish plate: 150g of fish at ₱280/kg (₱42), 100g of rice at ₱60/kg (₱6), vegetables and sauce ingredients (₱18), for a total ingredient cost of ₱66. Sold at ₱240, that is 66 ÷ 240 = 27.5% — comfortably inside the usual range for a main course.

A house cocktail, for comparison: 45ml of a base spirit at ₱900/litre (₱40.50), plus mixers and garnish (₱9.50), for a total of ₱50. Sold at ₱220, that is 50 ÷ 220 = 22.7%, well inside the tighter 18–25% band beverages are usually held to.

The range worth targeting

Most full-service restaurants and hotel kitchens target 28–35% for food and 18–25% for beverages — beverages run lower because pours are more standardised and margins are structurally higher. A dish under the range is often fine, usually good portion control. One well over it is usually a pricing problem, a portioning problem, or both.

The range is a target, not a rule to hit on every single dish. A signature dish that runs a few points over 35% can still be worth keeping on the menu if it is what brings guests in the door — the number is there to flag which dishes deserve a closer look, not to force every plate into an identical margin.

Why the percentage matters more than the peso profit

A ₱600 seafood platter earning ₱350 in gross profit looks like a bigger win than a ₱150 rice bowl earning ₱105 — until you look at the percentage. The platter is running close to 42% food cost; the rice bowl is at 30%. Sell twice as many rice bowls in the same kitchen time and the lower-priced dish earns more total margin per hour of kitchen effort, which the peso figure alone hides completely.

Tracking it across a whole menu, not one dish

A single dish's food cost tells you about that dish. A weighted average across everything actually sold in a month — total ingredient cost of all covers divided by total revenue from those covers — tells you whether the menu as a whole is healthy, and it is the number that actually shows up in a departmental profit figure. A menu can have three dishes wildly over target and still average out fine if those three barely sell, or it can look fine dish-by-dish and still average badly if the worst-margin items happen to be the best sellers.

When a rising number is not actually bad news

Food cost percentage climbing for a month is not automatically a problem worth panicking about — a supplier price spike during a shortage, a deliberate decision to use better ingredients on a signature dish, or a short-term promotion priced to draw people in can all move the number up on purpose. What is worth acting on is a number that climbs and stays climbed with no explanation anyone can point to — that is the pattern that means a recipe has drifted, a portion has crept, or a price was never adjusted when it should have been.

What this number does not catch

It prices one dish as written, made exactly as costed. It does not catch shift-level waste, spoilage or a portion that quietly grew over a few months of a different cook working the station — those are real costs, and the honest way to catch them is a stock ledger recording what actually left inventory against what the recipe says should have left it, not a per-dish calculation.

It is also food cost specifically, not total cost. Labour, rent and utilities sit in a separate calculation — mixing them in makes the number meaningless for the one thing it is good at: catching a recipe or a price that has drifted from what it used to be.

How often to actually check it

Monthly is usually enough for a menu that isn't changing — checking weekly on a stable menu mostly produces noise, since a handful of large orders one week and a quiet one the next will move the percentage without meaning anything. The exception is right after a supplier price change or a menu update, when a fresh check tells you immediately whether the old prices still hold rather than waiting a month to find out the margin has already slipped.

A quick way to spot the outliers

Rank every dish on the menu by food cost percentage and look at the two ends of the list rather than the middle. The dishes at the bottom are quietly subsidising the ones at the top, and most kitchens have never actually looked at the list sorted this way — they know their food cost percentage in aggregate, if at all, but not which specific dishes are dragging it up.

What to actually do with a dish over target

Three real levers, usually in this order of preference: tighten the portion if it was generous beyond what the recipe calls for, swap a component for a cheaper equivalent that doesn't change the dish's identity, or raise the price if neither of those is honest to do. Cutting quality to hit a number is the wrong lever — a guest notices a worse dish faster than they notice a slightly higher price, and the reputation cost outlasts the margin gain. Whichever lever gets pulled, re-cost the dish afterward rather than assuming the change did what it was meant to; a portion cut that still leaves the plate looking generous has not actually fixed anything.