Most restaurant owners are quietly bleeding money without realizing it. Your food costs might be slowly eating away at your margins while you think you're profitable...
68% of restaurant owners can't tell you their actual food cost percentage. You think you're profitable, but your food costs are slowly eating away at your margins. Here's exactly when your food cost becomes a problem and how to fix it.
What is a normal food cost?
A typical food cost for restaurants sits between 28% and 35%. This means that a maximum of 35 cents of every euro in revenue goes to ingredients.
💡 Example:
You sell a pasta for €22.00 incl. VAT (= €20.18 excl. VAT)
- Ingredient costs: €6.50
- Food cost: (€6.50 / €20.18) × 100 = 32.2%
This falls within the normal range of 28-35%.
When does your food cost become problematic?
Your food cost becomes dangerous territory once you consistently exceed 35%. Hit 40% or higher? You're probably losing money on that dish.
- 28-32%: Healthy margin, room for unexpected costs
- 33-35%: Acceptable, but little buffer
- 36-39%: Too tight, raise your prices or lower costs
- 40%+: Loss-making, immediate action needed
⚠️ Note:
Always calculate with the selling price excluding VAT. The price on your menu includes 9% VAT. €30.00 incl. VAT = €27.52 excl. VAT.
Why is your food cost creeping up?
Five sneaky reasons your food cost rises while you're not looking:
- Suppliers raise prices without you adjusting your menu price
- Portions too generous - your chef gives more than you calculated
- Forgotten trim loss - you calculate with purchase price, not actual price after processing
- Garnish not included - sauces, oil, decoration all count
- Waste and theft - products that disappear without being sold
💡 Example of hidden costs:
Your €28.00 steak (€25.69 excl. VAT) seems to have 30% food cost:
- Steak 200g: €6.40
- But also: fries €0.80, sauce €0.60, butter €0.40, garnish €0.50
Total: €8.70 = 33.9% food cost (not 30%!)
The difference per type of business
Different types of businesses need different margins:
- Fine dining: 28-32% (higher prices, more margin)
- Casual dining: 30-35% (average prices)
- Pizzeria: 22-28% (low ingredient costs)
- Delivery: 28-32% (higher operational costs)
What does a high food cost cost you?
Every percentage point of food cost above your target hits your profit directly. With annual revenue of €400,000, a 5% higher food cost means €20,000 less profit per year.
From analyzing actual purchasing data across different restaurant types, I've seen establishments lose their entire profit margin simply because they didn't track this number properly.
💡 Impact calculation:
Restaurant with €500,000 annual revenue:
- Target: 30% food cost
- Actual: 37% food cost
- Difference: 7 percentage points
Loss: 0.07 × €500,000 = €35,000 per year
How do you lower your food cost?
Four proven ways to reduce your food cost:
- Raise your prices: A 10% price increase lowers your food cost by approximately 3 percentage points
- Check portion sizes: Weigh a portion occasionally to verify
- Include trim loss: Whole fish at €18/kg becomes €32/kg after filleting (45% loss)
- Find cheaper alternatives: Different supplier or comparable product
How do you check if your food cost is too high? (step by step)
Calculate your actual ingredient costs
Add up all costs: main ingredient, garnish, sauces, oil, butter - everything that goes on the plate. Don't forget to include trim loss.
Calculate your selling price excluding VAT
Divide your menu price by 1.09 to get the price excl. VAT. For example: €27.50 / 1.09 = €25.23 excl. VAT.
Calculate your food cost percentage
Formula: (Ingredient costs / Selling price excl. VAT) × 100. If you exceed 35%, action is needed.
✨ Pro tip
Calculate your food cost every 2 weeks for 8 weeks straight after any menu change. Most owners wait too long and miss the early warning signs of margin erosion.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
What if my food cost is 40%?
At 40% food cost you're probably losing money on that dish. Raise your price by 15-20% or lower your ingredient costs by reducing portions or finding cheaper alternatives.
Is 25% food cost too low?
No, 25% is excellent. It means you have a healthy margin. Just check that you're not pricing yourself out of your target market, but profitability-wise you're doing great.
Should I include VAT in my food cost calculation?
Never include VAT in food cost calculations. You pay for ingredients without VAT, so use your selling price excluding VAT for accurate comparisons.
How often should I check my food cost?
Check your food cost monthly for your top dishes and immediately after supplier price increases. This prevents silent profit leaks.
What if one dish has 45% food cost but sells well?
That dish is a profit killer. Raise the price or remove it from the menu. Popular dishes that lose money hurt you more with every sale.
Do drinks count toward my food cost percentage?
No, alcohol and beverages have their own cost category called beverage cost. Only calculate food ingredients in your food cost percentage to get accurate numbers.
Can I use different food cost targets for lunch vs dinner?
Absolutely. Lunch menus often run 2-3 percentage points higher due to smaller portions and lower prices. Set separate targets for each service period.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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