How to Calculate Your Real Food Cost

Ask most restaurant owners their food cost and they'll give you a number. Ask them how they calculated it and you'll get a shrug. The truth is, most owners are guessing — and that guess is usually off by 5-10%.

The formula

Real food cost is simple math, but you need the right inputs:

Food Cost % = (Beginning Inventory + Purchases - Ending Inventory) / Food Sales x 100

That's it. But here's where most owners go wrong:

Mistake #1: Using purchase cost instead of actual usage

If you bought $5,000 in food this week but only used $3,800 of it, your food cost isn't based on $5,000. It's based on what you actually used. That's why inventory counts matter — and why most owners skip them.

Mistake #2: Not accounting for waste

Dropped plates, expired product, overportioning, employee meals — these all eat into your food cost but never show up on a receipt. The gap between what you buy and what you sell is where profit disappears.

Mistake #3: Checking quarterly instead of weekly

Food costs change fast. A supplier raises chicken by 12% and you don't notice for six weeks? That's hundreds of dollars gone. The owners who stay profitable check their numbers weekly — or better yet, they get them automatically.

What "good" looks like

For most independent restaurants, a healthy food cost falls between 28-35% depending on your concept. Fine dining can run higher (35-40%). Fast casual should be lower (25-30%). But the number only matters if you're tracking it consistently.

The easier way

Expo tracks your invoice prices automatically. Text a photo of any supplier invoice, and Expo reads every line item, logs the prices, and alerts you the second something goes up. No spreadsheets, no manual entry. Just a photo and an answer.