Boost Your Profit Margin With Our Free Food Cost Calculator Tool

Learning how to calculate food costs can be challenging when you’re also managing kitchen staff, planning menus, negotiating with suppliers, and so much more. Use our free food cost calculator to keep your profit margins healthy and your customers coming back for the high-quality menu items they know and love!

With our free restaurant food cost calculator, it’s much easier to figure out specifics like menu prices and food and beverage budgets,  but that’s just the start. Read on to learn:

• What food costs are
• How to calculate food cost and food cost percentage
• How to improve food cost percentage
• The importance of food cost percentage
• Food cost FAQs

What Are Food Costs?

Food cost is the total cost of all the ingredients in a particular dish or across an entire menu. Learning how to calculate food cost, which involves using a food cost formula to tally ingredient expenses is the first step toward gaining more control over your restaurant expenses. 

But don’t worry – if you simply don’t have time to do it manually, no problem – we’ve made our food cost calculator free to use!

How to Calculate Food Costs

For restaurant owners, profitability means striking a careful balance between ingredient costs and quality, while setting menu prices high enough to generate a profit – but not so high that they discourage customers from coming back. That’s why many restaurateurs use a food costing calculator or menu price calculator to determine the prices of dishes.

But sometimes you just don’t have a restaurant food cost calculator close at hand – so let’s learn how to cost out a recipe manually, using the food cost formula.

Food Cost Formula

Total Food Cost Per Dish = ∑ (Ingredient Cost per Unit × Quantity Used)

Example of How to Calculate Food Costs

Let’s say you run a small restaurant called Noodles Bistro. If you want to calculate your net profit margin and gross profit margin, you can try our free restaurant profit margin calculator. If you’ve already confirmed that your profit margins are healthy, learning how to use the Total Food Cost Per Dish formula can help you keep them that way. 

Let’s practice by calculating the cost of a serving of artisanal spaghetti and meatballs. 

Step 1: List all the ingredients in your dish. 

¼ pound of grass-fed ground beef

⅛  cup of seasoned bread crumbs

¼ large free range egg

½ tablespoon of onion

8 ounces of gourmet spaghetti sauce

2 ounces of fresh spaghetti

Step 2: Calculate the cost per unit for each ingredient.

Grass-fed ground beef: $8.00/pound

Seasoned bread crumbs: $5.00/cup

Large free range egg: $0.50/egg

Tablespoon of onion: $2.00/cup

Gourmet spaghetti sauce: $6.00/24 oz

Fresh spaghetti: $4.00/16 oz 

Step 3: Multiply the cost per unit by the quantity used to make a single serving.

¼ pound of grass-fed ground beef at $8.00/pound = $2.00 

⅛  cup of seasoned bread crumbs at $5.00/cup: $0.63

¼ large free range egg at $0.50/egg: $0.13

½ tablespoon of onion at $2.00/cup: $0.13

8 ounces of gourmet spaghetti sauce at $6.00/24 oz: $2.00

2 ounces of handmade spaghetti at $4.00/16 oz: $0.50

Total Food Cost Per Dish = $5.39

Food Cost FAQs

Looking for more information about food costs beyond how to use a food cost calculator? Here are some of the most commonly asked questions about food costs.

How to Calculate Food Cost Percentage?

Food cost percentage is the ratio of money spent on ingredients versus the revenue earned from menu sales. Typically, restaurant food cost calculators express this ratio as a percentage and for successful, profitable restaurants, that percentage is usually between 28% and 35%. If you want to make sure you’re not spending too much in any particular category, here are some other industry benchmarks you should be aware of:

Our free food cost calculator can help with those calculations. But if you’d rather do the math by hand, the formula for food cost percentage is:

Total food cost percentage = (Total cost of goods sold / total revenue) x 100

Here’s an example based on Noodles Bistro, the fictional restaurant we mentioned above. 

Eric, owner of Noodles Bistro, needs to calculate his total food cost percentage for May. When he looks back through his books, he sees that his total inventory was worth $8,500 on May 1st. He also notes that he spent an additional $6,000 over the course of the month, to cover regular expenses plus the extra food and beverage supplies needed for the restaurant’s Mother’s Day brunch event.  At the end of the month,  the total value of his remaining inventory was $2,500.

Value of Inventory of Food and Beverage at start of May: $8,500

Value of Inventory Purchases in May: $6,000

Value of Inventory at end of May: $2,500

Eric’s Cost of Goods Sold (CoGS) would be = [(Beginning Food and Beverage Inventory Value) + (Inventory Purchases)] – (Ending Inventory) = [($8,500) + ($6,000)] – $2,500 = $14,500 – $6,000 = $12,000

Over the course of April, Eric used up $12,000 worth of Noodles Bistro’s food and beverage inventory. 

How to Improve Food Cost Percentage

There are a few easy ways to reduce your food cost percentage without impacting the quality of your menu offerings. These include: 

• Buying in bulk for items you know you’ll use to save on up-front costs
• Using local, seasonal ingredients to save on shipping costs (bonus points for freshness!)
• Keeping your food costs down and reducing waste with a restaurant inventory management software like TouchBistro’s Restaurant Inventory Management System 
• Reducing waste by creating a menu that uses the same ingredients across multiple dishes 
• Reducing pricing when you need to sell food quickly to reduce food waste and boost revenue
• Ensuring your menu prices are just right by using our food cost calculator (free and easy to use!) 

Why is Food Cost Percentage Important?

Knowing your food cost percentage can boost your bottom line and help you make informed decisions about everything from restaurant menu pricing to suppliers. 
Using a food costing calculator or a menu price calculator makes it much easier to decide how much to spend on ingredients and charge for your menu items. But you don’t have to stop there. Restaurant inventory management software makes it easy to keep track of spending and food waste so if you’re ready to take your food cost management to the next level, find out how our Inventory Management System can help.

by Megan Lee

Megan is the Content Marketing Specialist at TouchBistro, where she uses her passion for food to write about the restaurant industry. She’s a big “foodie” at heart, and you can always find her enjoying a delicious meal at a restaurant with friends and family, or cooking one up at home. She also loves relaxing with a good book and making progress at the gym.

Topics

Inventory