Food cost percentage = (cost of food used ÷ food sales) × 100 over a period, where food used = opening stock + purchases − closing stock. Most Indian full-service restaurants target 28–35%, and QSR or cloud kitchens 22–28%. On ₹10 lakh of monthly sales, a single percentage point is ₹10,000 — which is why the best operators track it weekly, not once a year.
What the number actually tells you
Food cost percentage is the share of your food sales that goes on the ingredients to make that food. Run at 32% and every ₹100 of food sold cost you ₹32 in raw materials, leaving ₹68 to cover everything else — labour, rent, gas, packaging, and profit. It is the single most-watched number in a kitchen because it moves fast and it moves margin.
The formula — and why a stock-take is non-negotiable
The headline formula is simple: food cost % = (cost of food used ÷ food sales) × 100. The catch is "food used," which is not the same as what you bought. You measure it with a stock-take:
Food used = opening stock + purchases − closing stock.
Count your inventory at the start of the period, add everything purchased during it, subtract what is still on the shelf at the end. That is what you genuinely consumed. Skip the stock-take and use purchases alone, and your number lurches every time you buy in bulk — useless for spotting a real problem.
Benchmark bands for the Indian market
| Format | Healthy food cost |
|---|---|
| Fine dining | 35–40% |
| Full-service casual | 28–35% |
| QSR | 25–30% |
| Cloud kitchen | 22–28% |
| Bar (food only) | 25–30% |
| Bar (beverage) | 18–24% |
These are guides, not gospel. A cloud kitchen runs food cost lower because delivery commissions take 25–30% off the top; fine dining runs higher because the price point carries it. What matters is your own trend against your own target.
Theoretical vs actual: the gap is your leak
There are two food cost numbers, and the space between them is where money disappears. Theoretical food cost is what your recipes say you should have spent, given what you sold. Actual food cost is what the stock-take says you really spent. When actual runs well above theoretical, the difference is leaking through over-portioning, wastage, spoilage, staff meals, or theft. Chasing that gap is more productive than shaving another rupee off a recipe.
Why weekly beats monthly
A monthly food cost tells you about a problem four weeks after it started — long after the paneer over-portioning or the supplier price creep did its damage. A weekly count catches it while it is small. You do not need to count every SKU weekly; count your top 10–15 highest-value, fastest-moving items, which drive most of the variance, and do a full count monthly.
Food Cost % Tracker
Calculate actual COGS and food cost percentage for any period using opening/closing inventory and purchases. Spot problems before they show up in the P&L.
Step by step
Calculate your food cost percentage for any period.
- Take opening stock. Value your food inventory at the start of the period.
- Add purchases. Total everything you bought during the period.
- Take closing stock. Value the food inventory still on hand at the end.
- Work out food used. Food used = opening stock + purchases − closing stock.
- Divide by food sales. Food cost % = (food used ÷ food sales) × 100. Compare against your target and last period.
Frequently asked questions
What is a good food cost percentage in India?
Most full-service Indian restaurants aim for 28–35%, QSR for 25–30%, and cloud kitchens for 22–28% because delivery commissions take a large cut. Beverage food cost at a bar is lower, around 18–24%. Track your own trend against your target rather than a universal number.
What is the difference between theoretical and actual food cost?
Theoretical food cost is what your recipes say you should have spent for the items sold. Actual food cost is what a physical stock-take says you really spent. The gap between them reveals losses from over-portioning, wastage, spoilage or theft.
How often should I calculate food cost?
Do a full stock-take monthly and a lighter weekly count of your highest-value, fastest-moving items. Weekly tracking catches problems while they are small; monthly-only reporting tells you about a leak weeks after it started.
Keep reading
How to Cost a Recipe and Price a Plate: The Indian Restaurant Guide
A step-by-step guide to costing any recipe ingredient-by-ingredient, finding your true cost per portion, and setting a menu price at the food-cost % you actually want.
FIFO and Kitchen Wastage: Plugging the Leak Nobody Logs
How FIFO stock rotation and a simple wastage log cut food cost — the three kinds of waste, why you must record it, and how to turn logged waste into rupees saved.