How do you work out your restaurant's food cost?

Food cost is usually the biggest cost a restaurant controls day to day. Knowing it, branch by branch and month by month, is the first step to protecting your margin.

Two ways to work it out

• From what you bought: add up your food and drink purchases for the month, ideally adjusted for what is left in stock.
• From a percentage: if you know your food cost is roughly a certain share of sales, apply it to your net sales. Quicker, but only an estimate.

Purchases are more accurate. A percentage is useful while purchases are not in yet, as long as everyone knows it is an estimate.

Compare it with the right sales

• Use net sales: what customers paid, after discounts and refunds, without VAT.
• Compare by branch, not only for the whole business. One kitchen with high waste can hide behind others.
• Look at it every month, next to the month before and the same month last year.

When it moves

• Supplier prices went up: check which dishes are hit and whether their prices still work, especially on delivery apps.
• Waste or portions changed: look at the branch, not the menu.
• Your sales mix changed: more of a high food cost dish can raise the share without anything being wrong.