Q:

How do you calculate food cost percentage?

A:

StarChefs explains that food cost percentage is figured by taking the total beginning inventory cost plus purchases minus the ending inventory costs; then dividing that number by food sales.

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Food cost percentage is generally figured on a weekly basis. If the formula returns an answer of 50 percent, then the restaurant spends 50 cents to purchase food for every dollar earned in sales. Restaurants can use a free online calculator to calculate food cost percentages. These calculators can break down the food cost per recipe or menu item. An acceptable percentage depends on the type of meal, such as breakfast, lunch or dinner, and the amount of additional expenses the restaurant must cover, such as overhead.

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Restaurants, caterers and other foodservice businesses use a standard food cost formula to determine their profit margin on food sales. A profitable restaurant normally has a food-cost percentage of anywhere from 28 to 35 percent.