Food cost percentage

Food cost percentage tells a restaurant how much of each rupee of food sales goes on ingredients. It is the single most watched number in restaurant management, because ingredient prices in Pakistan move often and a menu priced six months ago can quietly lose money.

The formula

Food cost % = cost of ingredients used ÷ food sales × 100.

Example

A plate of chicken biryani uses ingredients costing Rs 210 and sells for Rs 600. Its food cost is 210 ÷ 600 = 35%. For the whole week, the same restaurant used ingredients worth Rs 168,000 and made food sales of Rs 480,000. The weekly food cost is 168,000 ÷ 480,000 = 35%.

If chicken prices rise and the biryani's ingredients now cost Rs 255, the same Rs 600 plate has a food cost of 42.5%. The restaurant is making Rs 45 less on every plate without changing anything on the menu.

Why it matters

Rent, salaries and gas have to come out of what is left after food cost. When the percentage creeps up, profit disappears first. Watching it each week shows which dishes need a price change, a smaller portion or a cheaper supplier.

How software handles it

The weekly figure needs accurate stock counts; the per-dish figure needs a recipe card with ingredient costs. ArfaPOS links each recipe to inventory on its Growth and Business plans, so ingredients are deducted as dishes sell and food cost can be tracked from real sales. Our guide on food cost percentage goes further.