How to Calculate Food Cost Percentage for Your Restaurant
Food cost percentage is the backbone of your restaurant's profitability. It tells you how much of your revenue goes into raw ingredients. The formula is simple: (Cost of Ingredients ÷ Menu Price) × 100. For example, if your paneer tikka costs ₹80 to make and you sell it for ₹250, your food cost percentage is 32%.
Most profitable restaurants in India maintain a food cost percentage between 28-35%. If yours is above 40%, you're likely losing money on every plate. Track this weekly for your top-selling dishes—dal makhani, biryani, tandoori items—and adjust portion sizes or suppliers accordingly.
Three Quick Wins to Lower Food Costs
Negotiate bulk rates with your sabzi mandi suppliers. Use every part of ingredients—methi stems, leftover rotis for breadcrumbs. Most importantly, reduce wastage by tracking what gets thrown out daily. Even saving ₹500/day adds up to ₹15,000 monthly.
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