Food cost percentage is the cost of ingredients as a share of the revenue they generated. Calculated as cost of goods sold divided by food revenue, multiplied by 100.
It is best used per item and in aggregate together. A single blended figure hides that one dish may be running at 45% while another runs at 22%.
Percentage alone is not enough for menu decisions, because a high-percentage item selling in volume can contribute more cash than a low-percentage one that rarely sells. That is why menu engineering uses contribution margin in currency.
Example
A dish costing 4.20 in ingredients and selling for 16.00 has a food cost of 26.3%.
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