How to Calculate Your Restaurant's Food Cost (and Why It Matters)

Food cost is one of the most important metrics in running a restaurant, and one of the most overlooked. Most owners know what they bill. Few know what they spend per dish.

What is food cost?

Food cost is the percentage of your revenue that you spend on ingredients. The formula is simple:

Food cost (%) = (Ingredient cost / Selling price) × 100

For example: if a steak dish costs €4 in ingredients and you sell it for €16, the food cost is 25%.

What is the ideal food cost?

It depends on the type of establishment, but as a reference:

• Traditional restaurant: 28-35%
• Pizzeria: 25-30%
• Cafe/snack bar: 20-28%
• Fine dining: 30-38%

Above 35% in a normal operation is a warning sign: either your prices are too low, there is waste, or your purchasing isn't under control.

How to calculate it dish by dish

For each dish, you need to know:

1. What the ingredients and exact quantities are (the recipe spec)
2. The current price of each ingredient (what you paid on your last purchase)
3. Preparation losses (the real yield: 1kg of pork loin yields about 750g once trimmed)

The real problem isn't the calculation, it's keeping the prices up to date. Suppliers raise prices mid-month, and if you're not logging your invoices, you don't know your margin has dropped.

The most common mistake

Calculating food cost once, in January, and never updating it again. Costs change. Your margins change. And you keep selling at the same price, convinced you're making 30% when in reality you're making 18%.

How Tinz solves this

Tinz reads your invoices automatically (just take a photo) and updates ingredient costs in real time. Every time your meat supplier raises a price, the affected dishes are flagged, before you reach the end of the month with a surprise.

You can see the updated food cost of every dish, compare it with the previous month, and see exactly where the money is slipping away.

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Read also: Restaurant inventory management: why it's always harder than it looks

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