How do you calculate food cost percentage?
Food cost percentage is the ingredient cost of one serving as a share of its selling price. Divide the ingredient cost by the price and multiply by 100.
Food cost % = (ingredient cost per serving ÷ selling price per serving) × 100
Food cost % and margin are not mirror images
Food cost % measures ingredients as a share of the selling price. Margin measures what remains after all direct costs, including packaging and fees. Direct cost % + margin = 100%, but food cost % + margin is only 100% when there is no packaging or other direct cost.
What counts as 'food cost' changes the answer
Some operators include packaging in food cost; others keep it separate. Neither is wrong, but comparing your number to someone else's is meaningless unless you both count the same things.
MealMargin shows both: food cost % counts ingredients only, and direct cost % adds packaging and per-meal fees. Compare like with like.
Worked example
A burrito sold at $11.00:
- Tortilla, rice, beans
- $1.05
- Beef, 140 g
- $2.40
- Cheese, salsa, sour cream
- $0.95
- Foil and wrap
- $0.25
- Total cost
- $4.65
Ingredients only: (4.40 ÷ 11.00) × 100 = 40% food cost. Everything including packaging: (4.65 ÷ 11.00) × 100 = 42.3% direct cost, which is a 57.7% margin. The calculator above shows both.
Frequently asked questions
What is a healthy food cost percentage?
There is no single correct number. Appropriate targets vary by business model and product type: a high-volume operation with low labour costs can run a higher food cost than a business carrying heavy staffing, rent or delivery costs. The useful test is whether your profit before overhead, across everything you sell, comfortably covers your fixed costs.
Why did my food cost percentage change without my prices changing?
Because ingredient prices moved, portions grew, or your sales mix shifted toward lower-margin dishes. Re-cost your top sellers first — they move the average most.
Should I include waste in food cost percentage?
If you want the number to reflect reality, yes. Cost what you buy rather than what reaches the plate, or add a waste allowance of a few percent.