Quick answer
Food cost % = cost of ingredients ÷ selling price × 100. A dish with ₱69.95 in ingredients that sells for ₱220 has a food cost of 31.8%. To price a new dish, divide its ingredient cost by your target: ₱69.95 ÷ 0.30 = about ₱235 for a 30% food cost. Many restaurants aim for roughly 28% to 35%.
1. What food cost is, and why it matters
Food cost is how much of every peso a customer pays goes to the ingredients on the plate. It's usually shown as a percentage of the selling price.
It's the number that decides whether a busy restaurant actually makes money. You can sell out every night and still lose money if your food cost is too high, because rent, salaries, gas and electricity all have to come out of what's left.
2. How to compute food cost per dish
Start with the recipe. List every ingredient in one serving, the amount used, and what that amount costs you at your current supplier price.
Here's a chicken adobo with rice, using sample prices:
| Ingredient | Amount per serving | Your price | Cost per serving |
|---|---|---|---|
| Chicken thigh | 250 g | ₱220 per kg | ₱55.00 |
| Soy sauce, vinegar, garlic, bay leaf, pepper | Per recipe | Per bottle or pack | ₱8.00 |
| Cooking oil | 1 tbsp | Per liter | ₱2.00 |
| Rice (uncooked) | 90 g | ₱55 per kg | ₱4.95 |
| Total ingredient cost | ₱69.95 | ||
Now divide by the selling price. If the dish sells for ₱220:
₱69.95 ÷ ₱220 × 100 = 31.8% food cost
That means about ₱0.32 of every peso from this dish goes to ingredients, and ₱0.68 is left for everything else. Don't forget the small items: sauces, garnish, oil, and takeout containers if the dish goes out for delivery.
3. How to price a dish from a target food cost
Turn the formula around to set a price for a new dish:
Selling price = ingredient cost ÷ target food cost
For the same adobo with a 30% target: ₱69.95 ÷ 0.30 = ₱233.17. Round it to a menu-friendly ₱235, which gives a food cost of 29.8%.
Then sense-check the price against what nearby restaurants charge for similar dishes. If the market won't pay ₱235, change the recipe or portion rather than quietly accepting a higher food cost.
4. Yield: the true cost of fish, meat and produce
The price you pay per kilo isn't what a usable kilo costs you. Bones, skin, trimmings and cooking loss all disappear before anything reaches the plate. The usable share is called the yield.
True cost per usable kg = purchase price per kg ÷ yield
Say you buy whole tuna at ₱300 per kg, and after cleaning and cutting, 60% is usable steak. The true cost is ₱300 ÷ 0.60 = ₱500 per usable kg. A 150 g tuna steak then costs ₱75 in fish, not the ₱45 you'd get from the purchase price. Skip this step and every seafood dish on your menu looks more profitable than it is.
Measure the yield yourself: weigh what you buy, weigh what's usable after prep, and divide. Do it a few times, because yield changes with the supplier and the season.
5. How to compute your monthly food cost
Per-dish costing tells you what should happen. Monthly food cost tells you what actually happened, including waste, spoilage, over-portioning and missing stock.
Food used = beginning inventory + purchases − ending inventory
Monthly food cost % = food used ÷ food sales × 100
| Beginning inventory (count on the 1st) | ₱80,000 |
|---|---|
| Plus purchases during the month | ₱150,000 |
| Minus ending inventory (count on the last day) | ₱70,000 |
| Food used | ₱160,000 |
| Food sales for the month | ₱500,000 |
| Monthly food cost | 32% |
Compare this with the food cost your recipes say you should have. If your dishes average 29% on paper but the month comes out at 32%, about 3% of sales is going to waste, spoilage, generous portions or stock that walks out the back door.
6. What is a good food cost percentage?
A common rule of thumb is roughly 28% to 35%, but there's no single right number. It depends on what you sell:
- Usually higher: dishes built on seafood, beef or imported ingredients.
- Usually lower: rice meals, pasta, coffee, drinks and desserts.
- Your whole menu: a high-cost bestseller is fine if low-cost items like drinks balance it out.
What matters more than hitting a textbook number is knowing your own, setting a target, and catching it when it drifts.
7. VAT, senior and PWD discounts: the Philippine details
Use your price without VAT
If your restaurant is VAT-registered, part of every menu price is 12% VAT that goes to the BIR. Compute food cost on the price without VAT. A ₱220 menu price is ₱220 ÷ 1.12 = ₱196.43 before VAT, so the adobo's real food cost is ₱69.95 ÷ ₱196.43 = 35.6%, not 31.8%.
Discounts lower what you collect
Senior citizen and PWD discounts, promos and free items all reduce the money you actually take in, while the ingredients cost the same. If many of your customers get a discount, base your prices on what you really collect per plate.
Service charge is not food sales
If you add a service charge for your staff, leave it out of your food sales when you compute food cost.
8. How to lower your food cost
- Cost every recipe and re-check it when supplier prices change.
- Standardize portions with scales, ladles and plating photos, so every cook serves the same amount.
- Log waste daily. What you can see, you can fix.
- Set par levels and order to them, so you stop over-buying what spoils.
- Count your stock regularly and compare it with what you should have.
- Use trimmings in soups, sauces, staff meals or daily specials.
- Compare suppliers on yield and quality, not only the price per kilo.
- Re-engineer the menu: promote dishes with a good margin and fix or drop the ones that don't pay.
9. Spreadsheet or restaurant system?
A spreadsheet works when you have a small menu and the time to update it. It gets hard when supplier prices change every week, several people handle stock, and you want to know today's food cost, not last month's.
That's what a restaurant management system is for. In Gen-KitchenManagement, the system we build for restaurants, each dish's food cost comes from its recipe and your latest ingredient prices. Receiving a supplier order updates both stock and prices, waste is logged as it happens, and the dashboard shows today's food cost against your target. The same system also handles inventory, staff attendance, payroll with payslips, and chat between the owner and staff.
You can try the live demo with no sign-up, or read more about our custom restaurant management system.
10. Frequently asked questions
What is the formula for food cost percentage?
Food cost percentage = cost of the ingredients ÷ selling price × 100. For a dish whose ingredients cost ₱69.95 and that sells for ₱220, the food cost is 69.95 ÷ 220 × 100 = 31.8%.
What is a good food cost percentage for a restaurant?
Many restaurants aim for roughly 28% to 35%. The right target depends on your concept: dishes built on seafood or beef usually run higher, while rice meals, drinks and desserts usually run lower. What matters most is that you know your number and that it stays steady.
How do I compute food cost for the whole month?
Add your beginning inventory and your purchases for the month, then subtract your ending inventory. That gives the food you actually used. Divide it by your food sales for the month and multiply by 100. For example, (₱80,000 + ₱150,000 − ₱70,000) ÷ ₱500,000 × 100 = 32%.
Should I include VAT when computing food cost?
If your restaurant is VAT-registered, use your selling price without the 12% VAT, because the VAT is not your money. A ₱220 menu price is ₱196.43 before VAT, so a dish with ₱69.95 in ingredients has a food cost of 35.6%, not 31.8%.