Food Cost Percentage: How to Calculate and Lower It

Food cost percentage is the one number that decides whether your kitchen is a business or a hobby. It tells you how much of every taka you take in goes straight back out as the cost of ingredients. Run it too high and you can be busy every night and still lose money. Keep it in a healthy range and even a modest restaurant turns a real profit. This guide shows you the formula, what a healthy food cost percentage looks like in Bangladesh, and concrete ways to bring it down, all in taka with a worked example.

The good news is the maths is simple. You do not need an accountant to work out your food cost percentage. You need two numbers you already have, your cost of ingredients and your sales, and the discipline to track them. Let us start with the formula.

The food cost percentage formula

Food cost percentage is your cost of goods sold (COGS) divided by your food sales, expressed as a percentage:

Food cost % = (Cost of goods sold ÷ Food sales) × 100

COGS is the cost of the ingredients in the food you actually sold over a period. The cleanest way to calculate it for a month is:

COGS = Opening stock + Purchases − Closing stock

Take a worked example. Suppose your kitchen starts the month with ৳1,50,000 of stock, buys ৳3,10,000 of ingredients during the month, and ends with ৳1,40,000 of stock left:

• COGS = 1,50,000 + 3,10,000 − 1,40,000 = ৳3,20,000
• If your food sales for the month were ৳8,00,000, then
• Food cost % = (3,20,000 ÷ 8,00,000) × 100 = 40%

That single percentage is the headline. To get it right you need accurate stock counts and real purchase prices, which is exactly what good restaurant inventory management gives you. Garbage stock numbers in, garbage food cost out.

What a healthy food cost percentage looks like

There is no single magic number, because it depends on what you sell. As a guide, most restaurants in Bangladesh aim for a food cost percentage in the 28 to 35 percent range, with the wider reality looking like this:

A biryani house running at 40 percent can be perfectly healthy, while a tea-and-snacks shop at 40 percent is in trouble. Judge your number against your own type of food, and watch the trend month to month more than any single reading. A food cost percentage that is creeping up is a warning long before it shows in your bank balance.

Why a few points matter so much

People underrate how powerful small movements in food cost are, because they translate straight into profit. On ৳8,00,000 of monthly sales, every single percentage point of food cost is ৳8,000 a month. Cut your food cost from 40 percent to 36 percent and you keep an extra ৳32,000 every month, ৳3,84,000 a year, without selling one more plate.

Compare that with chasing more sales. To add ৳32,000 of profit through extra revenue at a 13 percent net margin, you would need to bring in roughly ৳2,46,000 of new sales every month. Tightening food cost is almost always the faster, cheaper win. It also sits alongside your other big costs; see how it fits the whole picture in our breakdown of restaurant running cost in Bangladesh.

Theoretical food cost versus actual food cost

There are really two food cost numbers, and the gap between them is where your money hides. Theoretical food cost is what your dishes should cost if every plate were made exactly to spec, with no waste, no over-portioning and no shrinkage. Actual food cost is what your stock counts and purchases say you really spent. The actual figure is almost always higher, and the size of that gap tells you how much is leaking.

Here is a small worked example for a single dish. Cost out a plate of chicken curry by its ingredients, then compare the recipe cost against what really left your stock:

If you sell that plate for ৳300, its theoretical food cost is 33 percent (100 ÷ 300). But if your monthly stock figures show this dish actually costing closer to ৳120 a plate once spoilage, heavy hands and the odd unrecorded portion are counted, your actual food cost is 40 percent. That seven-point gap is pure leakage, and it is exactly what tighter portions, waste tracking and stock control close. Watching theoretical against actual, dish by dish, turns a vague "food cost feels high" into a list of named problems to fix.

Concrete ways to lower your food cost percentage

Once you know your number, here is how to bring it down without cheapening the food.

Cost your dishes and price to a target

Work out the ingredient cost of each menu item, then set the price so the dish hits your target food cost. If a plate of chicken costs ৳90 in ingredients and you want a 30 percent food cost on it, the price should be around ৳300 (90 ÷ 0.30). Price by feel and you will under-price your expensive dishes and leave money on the table. This dovetails with menu work; our guide to menu engineering shows how to push customers toward your most profitable items.

Tighten portions and consistency

Over-portioning quietly inflates food cost on every plate. Use scoops, ladles and a scale so portions match the spec you costed against. A heavier hand on rice or gravy across a thousand covers a month is a meaningful swing in your percentage.

Cut waste and spoilage

Food that spoils or gets thrown away is pure cost with no sale behind it. FIFO storage, prepping to par, and forecasting orders against real sales all push food cost down. Our full guide on how to reduce food wastage in your restaurant walks through each tactic.

Buy better and check prices

Supplier prices drift, often upward, and a dish that was 30 percent food cost last year can quietly become 36 percent today. Record what you actually pay through purchase orders so your costs stay current, compare suppliers, and renegotiate or substitute when a key ingredient jumps.

Watch your best and worst sellers

Not every dish carries the same food cost, and your menu mix moves your overall number. If your cheapest-to-make, highest-margin items sell well, your blended food cost drops. Use your sales data to see which dishes actually sell and which high-cost items barely move.

How Rosuii helps you track food cost

Rosuii gives you the raw materials for an honest food cost percentage. You record stock items with their costs, buy through purchase orders that keep prices current, log productions and wastages, and run stock counts, so your COGS reflects reality instead of a guess. On the sales side, the item-sales report shows exactly what sold and how much each item brought in, which is the other half of the equation and the key to understanding your menu mix.

Put the two together and you can calculate your food cost percentage from numbers the system already holds, then watch it move as you tighten portions, cut waste and adjust prices. It all lives in one browser-based platform alongside your POS, with inventory available on the Starter plan and above. See the toolkit on our features page.

A simple monthly habit

Make food cost a monthly ritual, not a once-a-year panic. At month end, count your closing stock, pull your purchases and your food sales, and run the formula. Write the percentage down and compare it with last month. If it rose, look at the usual suspects: portions, waste, supplier prices, and menu mix. A restaurant that checks its food cost percentage every month and acts on it will out-earn a busier one that never looks.

Want your costs and sales in one place so this takes minutes, not days? Create your free Rosuii account and set up your inventory and reports today.