Definition
Food cost percentage is the cost of ingredients expressed as a share of food revenue — in most Indian hotels it should sit between 28% and 35% depending on outlet mix.
Also called: Food cost percentage · Food cost ratio · Cost of goods sold percentage
How it is calculated
- Food Cost % = (Cost of Food Consumed ÷ Food Revenue) × 100
In practice
The problem with food cost is not setting it but holding it. Without a system it drifts upward a fraction of a percent at a time until a month-end P&L delivers a surprise nobody can explain. Two hotels can run identical restaurants, buy from the same mandi and serve the same covers, and report figures nine points apart.
The control loop that holds it runs daily rather than monthly: standard recipe cards costed at current prices, portion discipline with serving equipment sized to the recipe, purchase specifications for the top ingredients, weighed receiving against every challan, FIFO storage with date labels, and a daily food cost flash paired with a written waste log.
A month-end food cost number is a post-mortem; a daily number is a steering wheel. Even an approximate daily flash, built from issues and purchases against the day's food revenue, surfaces a problem within 24 hours while the trail is still warm.
Why it matters to an owner
Not every item needs the same food cost. A 40% cost on a high-priced dish can contribute more rupees than a 25% cost on a cheap one, so the percentage is a control measure rather than a target to minimise.
Frequently Asked Questions
Generally between 28% and 35% of food revenue, depending on the outlet mix. Where it should sit for a specific hotel depends on what that hotel sells.
Because what matters is not what you ordered but what arrived. Receiving is the cheapest control point in the chain and the most ignored — short deliveries of even 3 to 5% compound into lakhs over a year.