The food cost percentage is the most important ratio in kitchen costing: the share of food cost in net revenue. The formula is simple, yet it is often calculated wrong in two places, namely the gross-instead-of-net price and the forgotten sub-recipes. This article shows the formula, works a concrete dish through in francs, and explains both traps. For the follow-on question of how to turn this into a selling price, there is the article on price calculation.
What is the food cost percentage?
The food cost percentage is the share of food cost (the cost of ingredients) in net revenue:
Food cost % = food cost ÷ net revenue × 100
It answers a single question: how much of every franc taken in (net) goes to the ingredients? At 30 percent it is 30 centimes per franc of revenue.
What matters is what the food cost is not: it is not profit. Staff, rent, energy, insurance and depreciation are not in it. Food cost is the largest single block of variable cost, but only one of several. A dish with a 25 percent food cost can still make a loss if it takes two hours of hands-on work.
How do you calculate the food cost percentage?
In three steps: sum the food cost per portion, convert the selling price to net, then divide. Worked through on a rib-eye steak with fries and salad:
Step 1 – food cost per portion. Every ingredient as quantity × purchase price, including sides, sauce and garnish:
| Ingredient | Quantity | Purchase price | Food cost |
|---|---|---|---|
| Beef rib-eye | 180 g | CHF 55.00/kg | CHF 9.90 |
| Fries (raw) | 250 g | CHF 3.20/kg | CHF 0.80 |
| Salad side + dressing | 1 portion | – | CHF 0.90 |
| Herb butter, oil, spices | 1 portion | – | CHF 0.70 |
| Total food cost | CHF 12.30 |
Step 2 – convert the selling price to net. The dish is on the menu at CHF 42.00. This price is gross, that is, including 8.1% VAT. Net:
CHF 42.00 ÷ 1.081 = CHF 38.85
Step 3 – food cost percentage.
CHF 12.30 ÷ CHF 38.85 × 100 = 31.7%
The rib-eye has a food cost of 31.7 percent. Whether that is good depends on the concept (see below). The method stays identical for every dish.
Why do you always calculate on the net price (excluding VAT)?
Because the menu price is gross, but food cost is incurred net, and a comparison only holds on the same basis. Anyone who makes the mistake and relates food cost to the gross price flatters their margin:
- Wrong: CHF 12.30 ÷ CHF 42.00 = 29.3%
- Right: CHF 12.30 ÷ CHF 38.85 = 31.7%
A good two percentage points of difference, every time in the flattering direction. Across the whole menu this adds up to a margin that does not exist. Our free food cost calculator puts both readings on screen at once, so the gap is something you see while costing rather than something you find out later.
The rule behind it: food consumed on the premises is a dine-in hospitality service and is subject to the standard VAT rate of 8.1% (as of 2026). Take-away and drinks are partly subject to other rates; that is the subject of the article on price calculation. This is a general explanation of costing and not tax advice; what is authoritative is the Swiss VAT Act (Mehrwertsteuergesetz, SR 641.20) and the Federal Tax Administration (FTA).
Do you calculate food cost per dish or for the whole business?
Both, for two different purposes. Per-dish costing is the tool for the menu price. The operating ratio is the control instrument.
For the whole business you calculate the food cost of a period against the net revenue of the same period:
Kitchen food cost in the month CHF 18,000 ÷ net food revenue in the month CHF 60,000 = 30%
The difference matters: the sum of perfectly costed individual dishes almost never equals the operating ratio. In between lie shrinkage, spoilage, mis-portioning, staff meals and comps. When per-dish costing says 28 percent but the business lands at 34, the difference sits exactly there, and not in the recipe.
That is why you need both figures: the per-dish costing to set prices, and the periodic operating ratio to see what actually happens in practice.
What is a good food cost percentage?
As a rough guide, depending on the concept, around 28 to 35 percent for the kitchen, with drinks sitting distinctly lower. But that is a rule of thumb, not a target: a fine-dining operation with high service effort calculates differently from a high-volume lunch service, and a low food cost is not automatically better if it drives guests away on price.
Because the right target depends heavily on the business model, a separate article covers it in full. For this one, only this counts: the percentage only means something once it is calculated correctly, that is, net and with the complete food cost.
How do you keep food cost under control when purchase prices change?
Only with a costing that tracks price changes, otherwise you are calculating with yesterday’s numbers. A costing is correct on the day it is created. Then the butter price rises, the supplier for rib-eye changes, the season turns, and each of these steps shifts the food cost without anything changing on the menu price.
It becomes especially hard to track with sub-recipes. The herb butter from the example is perhaps in five dishes; if the butter gets more expensive, the food cost changes in all five. By hand this means recalculating the change everywhere, every time. Simply converting the portion size, by the way, does not change the food cost percentage (quantity and price grow together); for that our free recipe scaler is enough.
For exactly this costing with sub-recipes we are building Trolevo: recipes with nested sub-recipes whose food cost rolls up automatically, from all ingredients and sub-recipes, into one amount per dish and its associated food cost. Change a purchase price, and the costing changes everywhere with it. This helps keep the costing current; the pricing decision stays with the business. Trolevo is in development – get early access.
Sources
- FTA – VAT rates (standard rate 8.1%, reduced rate 2.6%)
- MWSTG – Swiss Federal Act on Value Added Tax, SR 641.20, Art. 25 (German original; the English text is a translation for information only and has no legal force)
The figures in the examples are illustrative and not an industry statistic. This article explains costing and is not tax advice.