What is food cost?
Food cost, also called the material ratio, measures what your food purchases represent as a share of your revenue. It is expressed as a percentage. If you take €100 in sales and the ingredients cost you €30, your food cost is 30%.
It is the first management indicator in a restaurant. Ahead of payroll, ahead of rent. It moves every week, depending on your orders, your portions and the prices on your menu. One point of ratio lost on €300,000 of revenue is €3,000 of margin gone over the year.
Two readings coexist, and it is essential to understand the difference. The food cost of a dish is calculated plate by plate, from a recipe costing sheet. The overall material ratio is calculated over a period, from invoices and stock counts. Both are useful. They never give exactly the same result, and that gap is precisely what teaches you the most.
How to calculate the food cost of a dish
Plate-level food cost rests on one thing: knowing what the dish actually contains. Not the chef's recipe from memory, but weighed quantities.
The formula and the four steps
The formula is simple: total ingredient cost ÷ selling price excluding VAT × 100. The rest is preparation work.
- List every ingredient in the recipe, with its exact quantity in grams or centilitres.
- Take the purchase price per kilo or per litre from your latest invoice, excluding VAT.
- Multiply to get the cost of that ingredient in the dish, then add everything up.
- Divide the total cost by the selling price excluding VAT and multiply by one hundred.
An example. A burger: 140 g of ground beef at €11/kg, so €1.54. A bun at €0.45. 30 g of cheddar at €9/kg, so €0.27. Lettuce, tomato, onion and sauce for €0.60. 150 g of frozen fries at €2.20/kg, so €0.33. Total cost comes to €3.19. Sold at €16.50 including VAT, or €15 excluding VAT, the dish's food cost works out at 21.3%.
The trap of preparation losses
The purchase price is not the price you actually use. A whole sea bass loses 45 to 55% of its weight once trimmed. A bunch of carrots loses 15% when peeled. If you cost on gross weight, you underestimate your cost by half on some items.
So build a yield factor into your costing sheets. For a product at €22/kg with 50% loss, the real cost of the usable product is €44/kg. That is the figure to use when calculating food cost.
On a menu of thirty items, there are almost always three or four dishes running above a 40% material ratio. The owner has never recosted them since opening day, and supplier prices have moved since.
The overall material ratio: the monthly calculation
Plate-level food cost tells you what should be happening. The overall ratio tells you what actually happened. The formula factors in stock: (opening stock + purchases − closing stock) ÷ revenue excluding VAT × 100.
Take a typical month. You start with €6,000 of stock, you buy €21,000 worth, and you finish with €5,500 in the store room. So you consumed €21,500. On €68,000 of revenue excluding VAT, the overall material ratio comes to 31.6%.
Now compare that figure with your theoretical food cost, the one your costing sheets give when applied to actual sales. A gap of 1 to 2 points is normal. Beyond 4 points, something is leaking: waste, over-generous portions, breakage, theft, till errors or comps that were never recorded. A stock count and loss-tracking method will usually pinpoint where the hole is within two or three weeks.
What food cost should you aim for?
There is no universal good food cost. The ratio depends on your model, your positioning and how much labour goes into each plate. A fine-dining restaurant buys expensive produce and transforms it heavily: its material ratio is high, but its average spend absorbs it. A pizzeria buys cheap and sells fast.
| Type of business | Target food cost | Indicative average spend | Watch out for |
|---|---|---|---|
| Pizzeria, pasta | 22 to 28% | €15 to €22 | Cheese weight per pizza |
| Bistro, brasserie | 28 to 33% | €22 to €35 | Daily special and waste |
| Burgers, food truck | 25 to 32% | €12 to €20 | Cost of sauces and fries |
| Fine-dining restaurant | 30 to 38% | €70 to €150 | Product yield and labour |
| Bar, wine bar with food | 18 to 25% (drinks) | €18 to €30 | Over-pouring by the glass |
These ranges are orders of magnitude observed across French commercial foodservice. The real benchmark is your own: a profitable restaurant is one whose material ratio is stable month after month, not one that hits a theoretical figure once.
To put the stakes in context: a 50-cover restaurant running two services, five days a week, with an average spend of €28, generates around €500,000 in annual revenue. Three points of ratio too many means €15,000 disappearing without anyone noticing.
Why food cost climbs, and how to spot the cause
When the ratio slips, there is rarely a single cause. Work through it item by item rather than cutting purchases at random.
- Portions: 20 g extra per plate on a meat at €18/kg is €0.36 multiplied by thousands of covers.
- Supplier prices: they move, your menu prices don't. Recost your recipes at least twice a year.
- Waste: out-of-date products, cooking mistakes, oversized mise en place on a Sunday evening.
- Sales mix: if customers mostly order the high-ratio dishes, the overall ratio rises even though nothing has changed in the kitchen.
That last point is the sneakiest. It is also the easiest to fix: give your high-margin dishes prominence on the menu instead of leaving them at the bottom of the page. A digital menu you can update in minutes makes that call easy, where a printed menu locks your prices in for six months.
Seven levers to control food cost day to day
Holding your material ratio is not a project, it is a routine. Here is what works, in order of best effort-to-result payoff.
- Write costing sheets for your twenty best-selling dishes, not for the whole menu at once.
- Weigh portions for a full week, then post the target weights at the pass.
- Buy against forecast sales, not out of habit: adjust orders twice a week.
- Run a monthly stock count on the ten product families that weigh the most.
- Record every loss in one single logbook, including comps and order mistakes.
- Compare three supplier quotes a year on your five main products.
- Reuse trimmings in a jus, a stock or a stuffing instead of binning them.
One last habit: check that your prices are consistent across the dining room, the menu and your online listings. The rules on price display in restaurants require clear information, and a price left un-updated somewhere also distorts your tracking.
How often should you calculate food cost?
The overall ratio is calculated every month, on a fixed date, after the stock count. That rhythm lets you react before the quarter is lost. Some businesses track it weekly on sensitive products such as meat and fish.
Plate-level food cost is recalculated at three moments: when you change the menu, when a supplier raises prices by more than 5%, and when you add a recipe. Beyond that, a general review at the start of each season is enough.
Improving your material ratio is not about buying cheaper produce. It is about knowing exactly what each dish costs, cutting what ends up in the bin, and giving your most profitable dishes better placement on the menu. The calculation takes half a day. It pays for itself in the first month.