How to calculate food cost percentage (with worked examples)

The formula

Food cost percentage = (cost of the ingredients ÷ the price you sell it for, excluding VAT) × 100. Gross profit percentage is simply 100 minus that number. Both describe the same thing from opposite ends.

Worked example: one dish

A burger sells at £14.50 on the menu. In the UK that price includes VAT at 20%, so the net selling price is £14.50 ÷ 1.2 = £12.08. The ingredients — patty, bun, cheese, sauce, garnish, fries — cost £3.62.

• Food cost: £3.62 ÷ £12.08 = 30.0%
• Gross profit: 70.0%, or £8.46 in cash per burger

Cash matters more than the percentage. A dish at 35% food cost that returns £11 of gross profit beats a dish at 25% that returns £4. Percentages pay no wages.

Worked example: a whole period

Period food cost uses stock, not recipes: opening stock + purchases − closing stock = cost of goods sold. Divide by net sales for the same period.

1. Opening stock £8,400
2. Purchases £21,300
3. Closing stock £7,900
4. Cost of goods sold = 8,400 + 21,300 − 7,900 = £21,800
5. Net sales £68,000 → food cost 32.1%

The three mistakes

• Comparing a VAT-inclusive price against a VAT-exclusive cost. This flatters your margin by a fifth and is the single most common error we see.
• Costing at the price on last year's price list instead of the invoice that arrived on Tuesday.
• Ignoring yield. A whole side of salmon is not the same weight as the portions that come off it; if you cost at raw weight you are under-costing every plate.

The gap between your theoretical food cost (what the recipes say you should have used) and your actual food cost (what the stock count says you did use) is your variance. That gap is waste, over-portioning, breakage or theft — and it is the number worth chasing.

FoxEra keeps both numbers side by side and re-costs every recipe the moment a supplier price changes, so the theoretical figure does not quietly go stale.