How to calculate food cost
Use both formulas. The period number tells you whether the kitchen leaked; the dish number tells you which plate to fix.
- Period (weekly or monthly) — Food cost % = (Opening inventory + Purchases − Closing inventory) ÷ Food sales × 100.
- Per dish — Food cost % = Ingredient cost ÷ Selling price × 100. Gross profit % = 100 − food cost %.
Example: opening stock ₹1.2L, purchases ₹2.8L, closing ₹1.0L, food sales ₹9L → food used ₹3.0L → 33.3% food cost. A butter chicken at ₹95 ingredients and ₹320 menu price is 29.7% — inside band even if the kitchen average is not. Run the dish check in the food cost calculator.
Calculate food cost % →Food cost % bands by cuisine
| Cuisine | Target band | Risk commodity |
|---|---|---|
| South Indian (thali, dosa, idli) | 24-30% | Coconut, urad dal, oil |
| Biryani (Hyderabadi, Lucknowi) | 26-32% | Basmati, mutton, ghee |
| North Indian (dal, paneer, roti) | 28-34% | Paneer, ghee, onion |
| Mughlai / Awadhi | 32-38% | Paneer, ghee, mutton, dry fruits |
| Chinese (Indo Chinese) | 28-34% | Chicken, soy, vegetables |
| Continental / Italian | 25-30% | Cheese, olive oil, premium proteins |
| Pizza | 22-28% | Cheese, flour, toppings |
| Burger / QSR | 26-32% | Chicken, beef, cheese, bun |
| Cafe (coffee + bites) | 28-34% | Coffee beans, milk, dairy |
| Fine dining (multi course) | 32-40% | Imported proteins, dairy, premium spice |
| Cloud kitchen (multi brand) | 26-32% | Packaging adds 5-8% on top of food cost |
| Catering (banquet) | 30-38% | Paneer, mutton, ghee, dry fruits |
The 7 commodities that swing Indian food cost
Onion, tomato, paneer, ghee, edible oil, chicken, mutton; these together account for 60-75% of an Indian kitchen's food cost. Track them daily; price every dish using current rates not last month rates. The menu pricing calculator pulls live Agmarknet mandi prices for all 7.
| Commodity | Typical price range (₹/kg) | Annual swing |
|---|---|---|
| Onion | 20-80 | 300-400% during crisis years |
| Tomato | 20-120 | 300-500% during summer/monsoon |
| Paneer (commercial) | 320-480 | 30-45% |
| Ghee (commercial) | 560-820 | 20-35% |
| Edible oil (palm/sunflower blend) | 120-220 | 40-80% |
| Chicken (broiler) | 180-280 | 30-50% |
| Mutton | 780-1150 | 20-40% |
Why recipe costing matters more than menu pricing intuition
‘Same as competitor minus ₹20’ is the cheapest way to lose margin. Two restaurants with identical menus and prices can have 6-8 point different food costs because of recipe yield, portion size, and supplier choice. Recipe cost every dish in your menu; even the ones that ‘work fine’. The ones that look safe are often the silent margin killers.
The audit framework
Run this weekly:
- Compute actual food cost %; total food purchases this week ÷ revenue from food sales this week.
- Compare to theoretical; recipe food cost × covers sold. The delta is the audit target.
- Delta ≤2 points; operationally tight; keep auditing monthly.
- Delta 2-4 points; likely portion creep or supplier drift. Audit recipes.
- Delta >4 points; almost certainly waste, theft, or systemic over portioning. Daily stock count for 30 days.
Channel mix and food cost
Aggregator orders typically run 1.5-3 points higher food cost than dine in (mostly from heavier portions ‘to satisfy delivery’ and from substitutions to avoid out of stock complaints). Cloud kitchens with 90%+ aggregator share need to plan for the higher band and price accordingly.
Seasonal food cost discipline
Three high risk windows for Indian food cost: Aug Oct (onion + tomato crises), Nov Feb (paneer + ghee demand spike from wedding season), Mar May (oil + mango pricing on dessert lines). Pre build supplier contracts and menu substitutions for each window.
Recipe-cost your menu with live mandi prices →