How to Calculate Food Cost: Plate Cost, Food Cost Percentage, Prime Cost and Menu Pricing

Food cost is the number that decides whether a busy restaurant makes money. This guide is for US restaurant, café, food truck and catering owners who want to calculate it properly: the cost of each plate, the food cost percentage for the month from your inventory, the gap between what you should have spent and what you did, prime cost, and how to turn all of it into menu prices. Every example uses real cost lines in dollars, and the figures on food price inflation come from the USDA and the Bureau of Labor Statistics as of October 2026.

Quick answer

Food cost % = (beginning inventory + purchases − ending inventory) ÷ food sales × 100. For a single dish, plate cost ÷ menu price. Price a dish by dividing its plate cost by your target percentage: a $4.28 plate at a 30% target sells for about $14.27.

• Plate cost must use usable yield: edible-portion cost = purchase cost ÷ yield %

• Many restaurants aim for about 28–32% food cost (Restaurant365 rule of thumb)

• Prime cost (food, beverage and all labor) around 60% of sales is the bigger test

• Compare actual food cost with theoretical; a gap over 1–2 points is money leaking

• Re-cost menus when prices move: USDA expects beef up 9.4% in 2026

Two kinds of food cost, and why you need both

When restaurant owners talk about food cost, they mean one of two things. Plate cost is what one serving of a dish costs to make, worked out from the recipe. It's a forward-looking number you use to set prices. Food cost percentage for a period is what you actually spent on food in a week or month, as a share of food sales, worked out from your purchases and inventory counts. It's a backward-looking number that tells you how well the kitchen ran.

You need both because they answer different questions. Plate cost tells you whether a menu price can make money if the kitchen follows the recipe. Period food cost tells you whether it did. When plate costs say the menu should run at 28% and the month comes in at 32%, the four-point gap is waste, over-portioning, theft, comps or errors, and on $100,000 of food sales that's $4,000 a month.

How to calculate plate cost

Plate cost is the sum of every ingredient on the plate at the cost of the amount you actually serve. Build it on a recipe costing card for each dish: one line per ingredient, with portion, purchase unit, purchase price, yield and cost.

Yield: the step most people skip

The price you pay for an ingredient is the as-purchased (AP) cost. But you rarely serve everything you buy. You trim lettuce, core tomatoes, peel onions, cut fat from brisket and lose weight when meat cooks. What's left is the edible portion (EP), and its cost per pound is higher:

EP cost = AP cost ÷ yield %

If romaine costs $2.40 a pound and you keep 75% after trimming, the usable leaves cost $2.40 ÷ 0.75 = $3.20 a pound. Skip this step and every plate with trimmed produce or butchered protein comes out cheaper on paper than it really is.

The way to get yield right is a yield test: weigh a case as delivered, prep it the way your kitchen does, weigh the usable product, and divide. Do it for your top ten ingredients by spend, and repeat when you change supplier or a product's quality shifts. For cooked proteins, decide whether the recipe portion is raw or cooked weight and cost it consistently.

Worked example: costing a cheeseburger plate

Here's a recipe costing card for a cheeseburger with fries at a neighborhood restaurant. Prices are illustrative wholesale prices; use your own invoices.

At a menu price of $15, food cost for this dish is $4.28 ÷ $15 = 28.5%, and the dish leaves $10.72 of gross profit per plate to pay for labor, rent and everything else. The small allowance at the end, sometimes called a Q factor, covers the cooking oil, salt, pepper and small amounts nobody weighs. Most operators use 2% to 5%.

How to calculate food cost percentage for the month

Plate costs tell you what should happen. The monthly calculation tells you what did. It uses the same cost of goods sold logic the IRS uses for any business that sells goods: start with what you had, add what you bought, subtract what's left.

Cost of food used = beginning inventory + purchases − ending inventory Food cost % = cost of food used ÷ food sales × 100

Suppose your restaurant starts September with $8,400 of food on the shelves and in the walk-in (valued at cost), buys $31,200 of food during the month, and counts $7,900 at the end. Food used is $8,400 + $31,200 − $7,900 = $31,700. Food sales for September, excluding sales tax and tips, were $102,000. Food cost is $31,700 ÷ $102,000 = 31.1%.

Try it — check one dish against your target

Ingredient Cost per PlateMenu PriceTarget Food Cost

Gross Profit per Plate₹10.72

Suggested Price at Target₹14.27

StatusWithin target

Food Cost Percentage28.53%

Open the full Food Cost Calculator (PDF, save, compare)

Making the count accurate

The formula is only as good as the inventory count. Count on the same day and at the same time each period, ideally after close on the last night of the month, using a sheet laid out in the order things sit on the shelves. Value each item at your latest invoice cost (or the method your accountant uses consistently), count partial cases and opened containers, and include prepped items in the walk-in at their ingredient cost.

Then adjust for food that left the kitchen without being sold as food:

• Staff meals are a labor benefit, not food cost. Track them and subtract them from food used (and add them to labor or employee benefits).
• Comps and promotions are a marketing cost. Some operators keep them in food cost; others move them out. Pick one and stick to it.
• Transfers between food and bar, such as citrus and cream used for cocktails or wine used in sauces, should be moved to the right category so neither percentage is distorted.

Keep beverage cost separate from food cost, because beer, wine and spirits carry very different cost percentages from food. Combining them hides problems in both.

Monthly food cost routine

1. 1

   Record every food invoice

   Enter purchases by category (protein, produce, dairy, dry goods, bakery) as they arrive, net of credits for returns.

2. 2

   Count ending inventory

   Same day and time every month, at latest cost, including prepped items. This count is next month's beginning inventory.

3. 3

   Calculate food used and food cost %

   Beginning + purchases − ending, adjusted for staff meals and transfers. Divide by food sales excluding sales tax.

4. 4

   Compare with theoretical food cost

   Multiply each item's plate cost by the number sold from your POS mix report, add it up and divide by food sales.

5. 5

   Investigate the variance

   If actual runs more than 1–2 points above theoretical, check portions, waste logs, receiving and recipes for the biggest-selling dishes first.

Theoretical vs actual food cost: putting the gap in dollars

Your point-of-sale system knows how many of each dish you sold. Multiply each item's plate cost by the number sold, add it up and you get theoretical food cost, what the month should have cost if every plate was made exactly to recipe. Divide by food sales to get theoretical food cost percentage.

Say the September sales mix gives a theoretical food cost of $28,968, or 28.4% of $102,000. Actual came in at 31.1%. The 2.7-point variance is $2,754 for the month, or about $33,000 a year. Restaurant365 describes this gap as a profit leak to investigate, and the usual culprits are familiar: heavy-handed portioning on proteins and cheese, prep waste and spoilage, unrecorded comps and staff meals, short deliveries signed for without checking, theft, and recipe cards that no longer match how the dish is made.

Start with the items that matter most: your top-selling dishes and your most expensive ingredients. Weigh portions for a week, check deliveries against invoices and keep a simple waste log at each station. Recount and recalculate the following month. Closing even half of a 2.7-point gap is worth more to most small restaurants than a price increase.

What's a good food cost percentage?

There's no official benchmark. A common industry rule of thumb, cited by restaurant software company Restaurant365, is roughly 28% to 32% of food sales, with quick-service concepts often lower and full-service and fine dining higher. Public-company data points the same way: NYU Stern's January 2026 dataset shows listed restaurant companies averaging a 32.24% gross margin, a measure that includes more than food, so treat it only as a sense check.

Your own target depends on your concept. A pizza or pasta place with cheap base ingredients can run food cost in the mid-20s, while a steakhouse or seafood restaurant may run well into the 30s and still do fine, because its labor per dollar of sales can be lower and its checks higher. That's why the number to manage alongside food cost is prime cost.

Prime cost: food plus labor

Prime cost = cost of goods sold (food and beverage) + total labor cost, including wages, payroll taxes, benefits and workers' compensation. Divide by total sales for prime cost percentage. Restaurant365 puts a sustainable prime cost at about 60% of sales, with full-service restaurants typically running 60% to 65% and quick-service 55% to 60%. Everything else, including rent, utilities, card fees, repairs, marketing and loan payments, has to fit in what's left, with profit after that.

Continuing the September example: food sales of $102,000 and beverage sales of $28,000 make total sales of $130,000. Food cost was $31,700 and beverage cost $6,700, so total cost of goods sold is $38,400. Labor, including payroll taxes and benefits, was $39,000. Prime cost is $77,400, or 59.5% of sales: right at the sustainable level, even though food cost alone looked a little high. Our guide on how to start a restaurant shows how prime cost feeds into a full restaurant P&L and break-even.

September at a glance (worked example)

31.1%

Actual food cost

$31,700 ÷ $102,000

28.4%

Theoretical food cost

from plate costs × sales mix

$2,754

Monthly variance

2.7 points of food sales

59.5%

Prime cost

$77,400 ÷ $130,000 total sales

How to price a menu from food cost

The food cost percentage method

The simplest pricing method divides plate cost by your target food cost:

Menu price = plate cost ÷ target food cost %

The $4.28 burger at a 30% target gives $14.27; you might set $14.50 or $14.95 depending on how your menu prices end. A $2.10 side salad at 25% gives $8.40. The method is quick and keeps your overall food cost on target if your sales mix holds.

Check the dollars, not just the percentage

Percentages can mislead. A steak with a $14 plate cost at 40% food cost sells for $35 and leaves $21 of gross profit; a pasta with a $3 plate cost at 20% sells for $15 and leaves $12. The steak's percentage looks worse, but each one sold pays more toward rent and wages. That's why many operators also look at contribution per plate, the price minus plate cost, and use menu engineering: sort dishes by popularity and contribution, promote high-contribution best-sellers, re-cost or reprice popular low-contribution dishes, and consider dropping items that are neither popular nor profitable. Our contribution margin guide explains the idea in more depth, and the menu profitability checker runs it for each dish.

Food cost % vs dollars per plate

Dish	Plate cost	Menu price	Food cost %	Gross profit per plate
Ribeye steak	$14.00	$35.00	40%	$21.00
Cheeseburger plate	$4.28	$15.00	28.5%	$10.72
Pasta pomodoro	$3.00	$15.00	20%	$12.00
Side salad	$2.10	$8.40	25%	$6.30

Ribeye steak

Plate cost

$14.00

Menu price

$35.00

Food cost %

40%

Gross profit per plate

$21.00

Cheeseburger plate

Plate cost

$4.28

Menu price

$15.00

Food cost %

28.5%

Gross profit per plate

$10.72

Pasta pomodoro

Plate cost

$3.00

Menu price

$15.00

Food cost %

20%

Gross profit per plate

$12.00

Side salad

Plate cost

$2.10

Menu price

$8.40

Food cost %

25%

Gross profit per plate

$6.30

Finally, look outside your kitchen. A price that hits your target but sits well above similar places nearby may not sell; one well below them may be leaving money on the table. If you also sell retail items such as sauces or baked goods to take home, our guide on how to calculate markup covers pricing for those.

Keeping food cost current when prices move

Plate costs go out of date as soon as supplier prices change. The USDA Economic Research Service's September 25, 2026 outlook expects food-away-from-home prices, what restaurants charge, to rise 3.5% in 2026, after a 3.8% rise in 2025, and grocery prices to rise 2.4%. Within that, it forecasts beef and veal up 9.4% and eggs down −29.4%. The Bureau of Labor Statistics' August 2026 Consumer Price Index showed restaurant menu prices up 3.4% over 12 months and grocery prices up 2.2%.

For a burger restaurant, a 9.4% rise in beef moves the patty in our example from $2.10 to about $2.30 and the plate cost to about $4.49, pushing food cost on a $15 burger from 28.5% to 29.9%. That's manageable for one dish but adds up across a beef-heavy menu. Re-cost your top dishes whenever a major ingredient moves more than about 5%, and review the full menu at least twice a year. When an ingredient falls sharply, as eggs are forecast to, it's a chance to widen margins on breakfast dishes or run a promotion.

Food cost and your taxes

The food cost you calculate for management is closely related to the cost of goods sold on your tax return. IRS Publication 334 sets out cost of goods sold for Schedule C as beginning inventory plus purchases, labor, materials and other costs, minus ending inventory. Your accountant may treat some items differently for tax, for example by including freight-in and packaging, so keep your management food cost consistent from month to month even if the tax figure differs.

Small businesses have an option on inventory. IRS Publication 538 explains that a small business taxpayer, one with average annual gross receipts for the three prior years at or below an inflation-indexed limit ($32 million for 2026), can choose not to keep inventories for tax purposes, as long as its method clearly reflects income. That doesn't change the management case for counting: without a monthly count you can't calculate food cost percentage at all.

Sales tax is not revenue. When you calculate food cost percentage, use food sales excluding the sales tax you collect for the state, and excluding tips.

Food cost control checklist

0/8

• Recipe costing card for every menu item, with yields and a 2–5% allowance
• Ingredient prices updated from invoices at least monthly
• Inventory counted on the same day and time each period, at cost
• Staff meals, comps and bar transfers tracked separately
• Theoretical food cost calculated from the POS sales mix
• Variance above 1–2 points investigated, starting with top sellers
• Prime cost reviewed monthly against your target
• Menu re-costed when a key ingredient moves more than about 5%

Share Print

Common food cost mistakes and how to fix them

Costing at purchase weight. Plate costs that ignore yield understate the real cost of produce, fish and butchered meat. Run yield tests and use EP cost.

Letting recipe cards go stale. A card costed last year at last year's prices is fiction. Update prices monthly from invoices, at least for your top 20 ingredients.

Inconsistent counts. Counting on different days, skipping the bar fridge or forgetting prepped items makes month-to-month food cost swing for no real reason.

Mixing food and beverage. Report them separately so a good bar month doesn't hide a bad kitchen month.

Chasing percentage over profit. Cutting food cost by shrinking portions on a signature dish can cost more in lost guests than it saves. Use contribution per plate and prime cost to keep the whole picture in view.

Official references

• IRS Publication 334 — Tax Guide for Small BusinessCost of goods sold on Schedule C
• IRS Publication 538 — Accounting periods and methodsInventories and the small business taxpayer option
• USDA ERS — Food Price OutlookMonthly food price forecasts by category
• BLS — Consumer Price IndexFood away from home and food at home inflation

What to do next

Start with your five best-selling dishes: build a costing card for each with real yields, and check them in the food cost calculator. Then set a date for your first full inventory count, so next month you'll have an actual food cost to compare against the theoretical one. If you're still planning your opening, read how to start a restaurant for the permits, labor rules and break-even, and our cost of goods sold guide for how the same numbers flow into your books.

Frequently asked questions

What is the formula for food cost percentage?

Food cost percentage = (beginning inventory + purchases − ending inventory) ÷ food sales × 100. If you started the month with $8,400 of food, bought $31,200 and ended with $7,900, you used $31,700. On $102,000 of food sales that's 31.1%. For a single dish, divide the plate cost by the menu price: a $4.28 plate on a $15 menu item is 28.5%.

What is a good food cost percentage for a restaurant?

Many operators aim for roughly 28% to 32% of food sales, the range Restaurant365 cites, with quick-service concepts often lower and fine dining higher. It's a planning benchmark, not a rule. A steakhouse can run higher food cost if labor is low, and a pizza shop lower. What matters most is that food plus labor, your prime cost, stays near 60% of sales.

How do I calculate plate cost?

List every ingredient in the dish with its portion, convert each to the unit you buy in, and multiply by the usable (edible portion) cost, which is the purchase price divided by the yield percentage. Add garnishes, sauces and sides, then add a small allowance of 2% to 5% for things like oil, salt and spillage. The total is your plate cost.

How do I price a menu item from food cost?

Divide the plate cost by your target food cost percentage. A dish that costs $4.28 to make, at a 30% target, should sell for about $4.28 ÷ 0.30 = $14.27, which you might round to $14.50 or $14.95. Then check that the dollar profit per plate is enough and that the price fits what local competitors charge.

What is the difference between theoretical and actual food cost?

Theoretical (ideal) food cost is what you should have spent if every dish was made exactly to recipe with no waste, calculated from plate costs and your sales mix. Actual food cost comes from your inventory count and purchases. The gap, called variance, is waste, over-portioning, theft, comps and recording errors. Most operators investigate when it exceeds one to two points.

What is prime cost?

Prime cost is your cost of goods sold (food and beverage) plus total labor, including payroll taxes and benefits. Divide it by total sales to get prime cost percentage. Restaurant365 puts a sustainable prime cost at about 60% of sales, with full-service restaurants typically at 60% to 65% and quick-service at 55% to 60%.

Sources & verification

Figures on this page were checked against the sources below when it was last reviewed on 9 October 2026. Each rate and limit is stored once with its own official source and review date, and official update channels are monitored daily so changes are picked up. How we verify

1. 1.Publication 334 (2025), Tax Guide for Small Business — IRS · accessed 9 October 2026
2. 2.Publication 538 (Accounting Periods and Methods) — Inventories — IRS · accessed 9 October 2026
3. 3.Food Price Outlook — Summary Findings (updated Sept 25, 2026) — USDA Economic Research Service · accessed 9 October 2026
4. 4.Consumer Price Index — August 2026 — U.S. Bureau of Labor Statistics · accessed 9 October 2026
5. 5.How to calculate food cost percentage — Restaurant365 · accessed 9 October 2026
6. 6.How to calculate prime cost in a restaurant — Restaurant365 · accessed 9 October 2026
7. 7.Margins by sector (US), January 2026 — NYU Stern (Aswath Damodaran) · accessed 9 October 2026
8. 8.Marketing and sales — U.S. Small Business Administration · accessed 9 October 2026