The formula
Food cost percentage = (cost of ingredients ÷ sales) × 100. You can calculate it for a single dish or for a whole period using your total food purchases and sales.
Example — a single dish
Say a burger costs you 3.00 in ingredients and you sell it for 10.00. Food cost percentage = (3.00 ÷ 10.00) × 100 = 30%. That means 30% of the burger's price covers ingredients, leaving 70% toward labor, overhead, and profit.
Example — a whole period
For a period, use: (beginning inventory + purchases − ending inventory) ÷ food sales × 100. If you started with 5,000 of stock, bought 8,000, ended with 4,000, and sold 30,000 in food, your cost of goods used is 9,000, so food cost % = (9,000 ÷ 30,000) × 100 = 30%.
Using it to price
To price from a target food cost, divide the dish cost by your target percentage. A dish costing 4.00 with a 30% target should sell for about 13.30 (4.00 ÷ 0.30). Always sanity-check against what the market and your guests will bear.