Industry Benchmarks
What is a Good Food Cost Percentage?
25–30%
Fine Dining
Higher quality ingredients, higher margins offset by premium pricing
28–35%
Casual Dining
Most restaurants in India target this range as the sweet spot
22–28%
QSR / Fast Food
Lower cost ingredients with high volume — tighter margins
💡 Rule of Thumb: Keep food cost below 35% to maintain a healthy profit after labour, rent, and overheads. If your food cost is above 40%, review your portion sizes, supplier prices, or menu pricing.
FAQ
Frequently Asked Questions
What is food cost percentage? +
Food cost percentage is the ratio of the cost of ingredients used to make a dish, compared to the selling price of that dish. Formula: Food Cost % = (Ingredient Cost ÷ Selling Price) × 100. For example, if a dish costs ₹80 to make and sells for ₹250, the food cost % is 32%. Most restaurants target 28–35%.
How do I set the right selling price for a dish? +
A common method is the cost-plus pricing approach: Selling Price = Ingredient Cost ÷ Target Food Cost %. For example, if ingredients cost ₹80 and you want a 32% food cost: Selling Price = ₹80 ÷ 0.32 = ₹250. Always also factor in labour cost, overheads, and desired profit margin.
What costs are NOT included in food cost? +
Food cost only covers the raw ingredient cost. It does not include labour/staff wages, electricity, rent, packaging, equipment depreciation, or other overheads. Total cost of a dish is significantly higher than just the food cost. Many restaurants use a Prime Cost measure (food + labour) targeting below 60–65%.
How can I reduce food costs in my restaurant? +
Key strategies: (1) Standardise recipes and portion sizes — inconsistent portioning wastes money. (2) Track stock daily with inventory software to catch wastage early. (3) Negotiate bulk pricing with suppliers. (4) Analyse your menu — identify high food-cost dishes and either reprice or remove them. (5) Use FIFO (first in, first out) to reduce spoilage.