Why Your Restaurant’s Food Cost Is High, and Where to Look

Food cost is the share of your sales that goes on ingredients. If you spend ₹33 on ingredients for every ₹100 of sales, your food cost is 33%. It is the first number I check in any restaurant, because small leaks here quietly decide whether the month ends in profit or loss.

Here is what most owners miss: when food cost is too high, the cause is almost never the ingredient they suspect. After 26 years in hotel and restaurant kitchens, I have learned to look in four places first. The real culprit is rarely the one the owner blames.

How to calculate food cost percentage

Take your opening stock, add what you purchased, subtract your closing stock, divide by your sales, and multiply by 100. That gives you the number. The harder question is whether the number is telling you the truth, and that is where most restaurants go wrong.

The four places food cost hides

• Purchasing: the rate on the bill is not always the rate you really pay.
• Portioning: the plate that leaves the kitchen is not always the plate in your recipe.
• Wastage: some of it is visible in the bin, and some of it never reaches the bin.
• Pricing: a dish can look profitable on paper and still lose money on the plate.

Why fixing one leak can make another worse

Cut portions too hard and guests notice. Squeeze a supplier too far and quality drops. Raise a price in the wrong place and the best seller slows down. Cost control is a balance, and the balance is different for every kitchen.

The comparison most restaurants never run

There is one monthly comparison that shows the size of your hidden loss in a single number. Most restaurants never run it, because it needs correct recipe costs and stock counted the same way every time. It only works on your own numbers, which is why I do it with the owner, not in a blog post.

Signs your food cost is leaking

• The percentage jumps around from month to month, even when the menu has not changed.
• Your stock count never matches what your records say should be left.
• The kitchen is busy all month, yet the margin looks thin.
• Supplier rates have changed, but your menu prices have not moved in a long time.
• Different cooks send out visibly different portions of the same dish.

If two or more of these sound familiar, there is a real leak. Which of the four areas is responsible, and how large it is, is what I work out with the owner.

Why a good-looking number can still hide a problem

A food cost that looks acceptable on paper can still be covering for waste in one area and under-pricing in another. The total can balance while individual dishes lose money. That is why I look at the dishes, not just the monthly figure.

Frequently asked questions

What is a good food cost percentage?

Many restaurants work within roughly 28% to 35%, but the right target depends on your menu, rent and labour cost.

How often should I check my food cost?

Every month at least, and weekly for the dishes that sell the most.

Related guides

Start by pricing every dish correctly with my guide to recipe costing, then see which dishes earn their place with menu engineering.

Want to know what your real food cost is?

Contact me and tell me about your restaurant. My Cost & Profit Audit finds where your margin is going and gives you a clear action plan.

See my restaurant consulting services, or contact me directly on +91 98229 56401 or at info@chefsushantaconsulting.com.

By Chef Sushanta Barui, Executive Chef and restaurant consultant with 26 years of experience in hospitality.