Quick Summary
- Food cost % = ingredient cost ÷ menu price (targets vary by concept)
- Prime cost under 60% matters more than food cost alone
- Standardize recipes → manage trim loss → use prep recipes to improve margins
”Keep Food Cost Under 35% or You’ll Fail”
If you’re starting a restaurant, you’ve probably heard this advice.
You might have read online that “food cost should be 30%” and tried to hit that number for every menu item. But when you look at actual industry data, reality is more nuanced.
Food Cost Percentage: The Basic Formula
Food Cost % = Ingredient Cost ÷ Menu Price × 100
If a $16 pasta dish costs $4.80 in ingredients:
$4.80 ÷ $16 × 100 = 30%The math is simple. The real question is: “What percentage should I aim for?”
Food Cost Varies by Restaurant Type
“30% is the right answer” isn’t accurate. Different concepts have different cost structures.
| Restaurant Type | Food Cost Range | Why |
|---|---|---|
| Coffee Shop/Bakery | 20–30% | Coffee beans are 10–15% cost, but rent and labor often exceed 40% of revenue |
| Casual Dining | 28–35% | The most common benchmark |
| Fast Food/QSR | 25–32% | Bulk purchasing keeps costs down, high turnover makes up the margin |
| Fine Dining | 35–45% | Premium ingredients, but higher check averages protect margins |
| Pizza/Wings | 28–35% | Commodity ingredients with consistent costs |
| Delivery-Only | 28–32% | Factor in 15–25% for packaging and platform fees separately |
Need category-specific benchmarks? Start here: Fried Chicken Restaurant Cost Guide, Korean Street Food Cost Guide, Pizza Cost Calculator.
What the Data Actually Shows (US)
The U.S. Bureau of Labor Statistics “Consumer Price Index: 2025 in Review” (released January 21, 2026) shows food-away-from-home prices up 4.1% over the 12 months ending December 2025, while food-at-home was up 2.4%. That gap is a reminder that restaurant pricing pressure runs hotter than grocery inflation—small operators need tighter cost tracking and more frequent menu reviews.
USDA ERS forecasts food-away-from-home prices will rise 4.6% in 2026, compared with 1.7% for food-at-home. Translation: the pricing gap is expected to persist, so menu review cadence matters more than it did pre-2020.
Sources:
A 3-Step Reality Check for Small Operators
- Pull your last 90 days of sales, food cost, and labor from actual spend
- Separate delivery fees, packaging, and discounts as non-food costs
- Track prime cost trends monthly before targeting menu-level percentages
Prime Cost Matters More Than Food Cost Alone
Prime Cost = Food Cost + Labor Cost. If labor is high, a low food cost won’t save your margin. That’s why operators track prime cost at 55–60% as the real benchmark.
| Level | Prime Cost | Status |
|---|---|---|
| Excellent | Under 55% | Comfortable margins |
| Good | 55–60% | Industry standard |
| Caution | 60–65% | Tight margins |
| Danger | Over 65% | Likely losing money |
40% food cost + 15% labor = 55% prime cost. Healthy. 28% food cost + 40% labor = 68% prime cost. Risky.
For the full breakdown and examples → Prime Cost Complete Guide.
Want to track prime cost automatically? Start at the KitchenCost landing page.
3 Practical Ways to Lower Food Cost
1. Standardize Your Recipes
“A handful of cheese” costs different amounts every time.
When you measure ingredients by weight, cost variance drops noticeably.
| Before | After |
|---|---|
| Half an onion | 3 oz onion |
| Some olive oil | 0.5 oz olive oil |
| A pinch of parmesan | 0.35 oz parmesan |
2. Account for Trim Loss (Yield Percentage)
Trim and prep reduce usable weight. If you skip yield loss, your costs look lower than reality.
Actual Cost = Purchase Price ÷ (Weight × Yield %)See the Loss Rate Calculation Guide for a step-by-step walkthrough.
3. Use Prep Recipes (Sub-Recipes)
Track house-made sauces, stocks, and doughs as prep recipes so costs roll up accurately. It also speeds up service and keeps quality consistent.
See the Prep Item Cost Management Guide for details.
Example: Calculating Menu Item Cost
Tomato Pasta
| Ingredient | Amount | Unit Cost | Total |
|---|---|---|---|
| Spaghetti | 4 oz | $0.12/oz | $0.48 |
| Marinara sauce | 5 oz | $0.32/oz | $1.60 |
| Olive oil | 0.5 oz | $0.40/oz | $0.20 |
| Garlic | 0.3 oz | $0.20/oz | $0.06 |
| Parmesan | 0.5 oz | $1.20/oz | $0.60 |
| Total | $2.94 |
- At $12 menu price → Food cost = 24.5% ✅ Good
- At $10 menu price → Food cost = 29.4% ✅ Acceptable
- At $8 menu price → Food cost = 36.8% ⚠️ Getting tight
Same cost, completely different margins depending on pricing.
Getting Started with Cost Tracking
Many operators start with spreadsheets. The problem?
- Manual updates every time prices change
- Formula errors accumulate
- Sub-recipes don’t automatically roll up
A dedicated recipe costing app solves these issues:
- Update one ingredient price → all recipes update automatically
- Trim loss (yield %) is built into calculations
- Enter your target margin → get recommended menu price instantly
The initial setup takes effort, but it pays off every time ingredient prices change.
Related Guides
- Prime Cost Complete Guide
- Loss Rate Calculation Guide
- Prep Item Cost Management Guide
- Margin vs Markup Differences
- Delivery App Profit Guide — How delivery fees affect your food cost ratio
- Solo Restaurant Labor Cost Guide — When you’re the cook and the owner
- Food Truck Cost Guide — Mobile food service cost benchmarks
- Bar & Beverage Cost Guide — Drink costing and pour cost targets
- Sandwich & Deli Cost Guide — Portion cost and combo pricing for deli shops
- Burger Restaurant Cost Guide — Patty yield math and combo pricing
- Chicken Restaurant Cost Guide — Fried chicken portioning and combo pricing
- Korean BBQ Cost Guide — Meat-heavy yield math and AYCE pricing
- Seafood Boil Cost Guide — Shell-on yield math and combo bag pricing
- Korean Street Food Cost Guide — Tteokbokki, kimbap, and fried snacks cost math
- Home Baking Pricing Guide — Small-batch pricing and labor allocation
- Ramen Cost Calculator — Why ramen’s food cost looks low but hides high labor and utility costs
Key Takeaways
- Food Cost % = Ingredient cost ÷ Menu price. Target varies by concept
- BLS shows food-away-from-home CPI +4.1% YoY (Dec 2025), and USDA ERS forecasts +4.6% in 2026—targets should reflect your concept, labor, and pricing reality
- Prime Cost (Food + Labor) under 60% is more important than food cost alone
- Standardize recipes, account for yield loss, and track sub-recipes to control costs
Don’t obsess over food cost percentage in isolation. Look at your total cost structure and find the right targets for your specific operation.