RestoBird Restaurant Glossary • Financial Analytics

Food Cost Percentage

DefinitionFood Cost Percentage is the ratio of total raw ingredient cost to the total revenue generated by selling those dishes, expressed as a percentage.

Detailed Explanation

Food Cost % measures how efficiently a restaurant converts raw ingredients into sales revenue. A lower food cost percentage indicates higher dish profitability.

Key Calculation FormulaFood Cost % = (Total Cost of Ingredients Used ÷ Total Dish Sales Revenue) × 100

Why It Matters for Restaurant Profitability

Controlling food cost % is vital for restaurant survival. A shift from 28% to 34% can wipe out a restaurant's entire net operating profit.

How RestoBird Solves This

RestoBird calculates food cost percentage continuously by combining live POS sales data with automated recipe inventory depletion.