Food cost percentage is the cost of food (and non-alcohol beverages) sold during a period, expressed as a percentage of total food sales for that period.
Formula: Food cost % = (Beginning Inventory + Purchases − Ending Inventory) ÷ Food Sales × 100
For full-service independent restaurants, the operational target is 28–32% food cost. The National Restaurant Association's 2025 Restaurant Operations Data Abstract reports a 2024 median of 32.0% for full-service operators. Push past 35% and operating margin gets squeezed before the rest of the P&L is even calculated. Drop below 25% and you are either underpricing or cutting portions in ways guests will notice.
Quick-service restaurants run a similar 28–32% band; fine-dining typically runs higher (32–38%) because of premium ingredient costs that the menu pricing absorbs.
Example: $5,000 beginning inventory, $14,000 purchases, $5,500 ending inventory, $42,000 weekly food sales. COGS = $5,000 + $14,000 − $5,500 = $13,500. Food cost % = $13,500 ÷ $42,000 × 100 = 32.1% — right at the NRA median.
This is the most common error. If you bought $14,000 in food this week but only used $13,500 (the rest is sitting in the walk-in as closing inventory), your food cost is $13,500 — not $14,000. Operators who use invoice totals as a proxy for food cost systematically misstate their numbers, typically by 2–4 points in either direction (real audits show 1–5% swings depending on inventory cycle).