KhanaOSFood cost percentage = (Ingredient Cost ÷ Menu Price) × 100 for a dish, or (COGS ÷ Food Revenue) × 100 for a period. Healthy range for Indian restaurants: 28–35%. Track it weekly — it is the single most important number in restaurant management.
Why this one number decides survival
A restaurant with a 30% food cost is spending ₹30 on ingredients for every ₹100 of food revenue. The remaining ₹70 must cover labour, rent, utilities, marketing — and your profit. Food cost is simultaneously the most actionable and most volatile line in your P&L: unlike rent, it changes every week with supplier prices, portion discipline and menu decisions.
The three food cost formulas
Formula 1 — Dish-level (for pricing)
Worked example — Butter Chicken: ingredient cost ₹95, menu price ₹320 → (95 ÷ 320) × 100 = 29.7%. Healthy. Drop the price to ₹260 for a promotion and it becomes 36.5% — amber zone.
Formula 2 — Period food cost (for monitoring)
COGS = Opening Inventory + Purchases − Closing Inventory
Worked example — May 2026: opening ₹45,000 + purchases ₹2,20,000 − closing ₹38,000 = COGS ₹2,27,000. On ₹7,20,000 food revenue → 31.5%. Within the healthy 28–35% band. This formula also captures spoilage implicitly — wasted food shows up in COGS without generating revenue.
Formula 3 — Ideal vs actual (for diagnosis)
The most powerful and least used formula. If your recipes and sales mix say food cost should be 30.5% but COGS says 35.8%, that 5.3-point variance on ₹10L monthly revenue is ₹53,000/month in unexplained cost — portioning errors, waste, unrecorded consumption or theft. Without this formula, you don't know the problem exists.
Food cost benchmarks by restaurant format in India
| Format | Target food cost % | Note |
|---|---|---|
| Full-service restaurant | 28–35% | Wider menus carry more variance risk |
| QSR / fast food | 28–32% | Standardised recipes keep it tight |
| Cloud kitchen | 28–34% of net revenue | Calculate on post-commission revenue, not GOV |
| Café | 25–35% blended | Beverages 15–25%; food items 40–50% |
| Sweet shop / mithai | 30–40% | Ghee and dry fruit prices dominate |
Your weekly food cost tracking routine
- Monday: physical count of high-value items (paneer, chicken, ghee, oil, dry fruits).
- Run Formula 2 for the previous week; compare against your target band.
- Run Formula 3 if variance jumped: check portioning, waste logs and voids first.
- Reprice or re-engineer any dish whose dish-level food cost crossed 38%.
Frequently asked questions
What is a good food cost percentage for a restaurant in India?
For a full-service Indian restaurant, 28–35% is healthy. QSRs and cloud kitchens should target 28–34%; cafés run a lower blended COGS of 25–35% because beverages carry 75–85% gross margins. Above 38%, most formats lose money on every plate once labour and rent are added.
How often should I calculate food cost percentage?
Weekly, not monthly. Monthly P&L analysis discovers problems six weeks after they began. A weekly COGS calculation catches drift while it is still correctable — before a manageable issue becomes a structural margin crisis.
What is the difference between ideal and actual food cost?
Ideal food cost is what your recipes say you should have spent given actual sales. Actual is what COGS shows you really spent. The gap reveals waste, over-portioning or theft. Below 2% variance is excellent; above 4% is a systemic problem worth investigating immediately.