Certain indicators distinguish between a profitable establishment and a fragile model. Food cost is one of them. Defined even before opening, it changes every week.
Before seeking to increase your revenue, start by analyzing your costs. Poorly managed food costs have a direct impact on gross margin, cash flow, and investment capacity.
Food cost corresponds to the actual cost of raw materials consumed, relative to the revenue generated over the same period. It is expressed as a percentage.
The calculation formula is as follows:
Food cost = (Cost of purchases consumed / Turnover) x 100
In practical terms, this includes the ingredients used, taking into account the initial stock, purchases, and final stock, which requires rigorous inventory tracking.
A variation of a few points can represent several thousand euros per year.
Excessive food costs limit your ability to absorb inflation, invest, or strengthen your teams, while a controlled ratio ensures the restaurant's profitability.
👉 Learn more: How to maximize your margin and profitability
The most common errors include forgetting to record goods flows, irregular inventory, or failure to update purchase prices.
One often overlooked issue concerns staff meals. When these are taken from stock without being included in the calculation, they distort the ratios and give a false picture of actual performance.
The recommended ratio is between 28% and 35%, but this is never a universal rule.
Product quality, homemade preparation, preparation time, and seasonality play a major role.
A dish made with premium ingredients may have a higher food cost, but this is offset by an appropriate selling price. The key is to ensure consistency between positioning, the menu, and the expected margin.
👉 Learn more: 6 essential profitability ratios in the restaurant industry
A declining gross margin despite good sales volume, an unexplained increase in purchases, or a significant discrepancy between theoretical sales and inventory outflows are often telltale signs.
Without reliable monitoring tools, these abuses sometimes go unnoticed for several months.
“I recommend Innovorder to managers who want to keep track of their network's figures and ratios.” Julien Perret - Founder of BChef
Food waste accounts for an average of between 5% and 10% of restaurant turnover.
Certain practices can help optimize the use of products, such as using all raw materials for broths or secondary preparations.
👉 For more information: Preventing food waste in communities and businesses
Prioritizing short supply chains and local products often makes it easier to control costs while enhancing the consistency of the menu.
Anticipating volumes, planning menus in advance, and sharing ingredients across several dishes makes negotiations easier. Buying in larger quantities can reduce the unit price, provided that volumes are carefully managed to avoid waste.
The technical data sheets precisely define the ingredients, quantities, and material cost of each dish.
Training teams on how to use them, weighing food, using measuring cups for sauces, or adjusting portions based on customer feedback can help reduce discrepancies.
Analyzing the best-selling dishes, those with high margins, and those that generate little profitability allows you to optimize your offering.
Readjusting certain prices, simplifying the menu, or removing underperforming dishes helps improve overall food costs without compromising the customer experience.
👉 For more information: Margins in the restaurant industry: 6 tips for dealing with inflation
Training teams on anti-waste issues helps align all staff members around the same objectives.
Internal workshops, dedicated training courses, and support from specialized organizations promote team buy-in and the implementation of sustainable methods.
Monitoring food costs cannot be a one-off task. Constant and regular monitoring is essential.
Point-of-sale software and analytics solutions play a key role. They enable you to track sales, identify the most popular products, and analyze the differences between forecasts and actual results.
With Innovorder's tools, restaurant owners can analyze their data and adjust orders and prices based on actual conditions.
👉 Learn more: Why integrating a 360 ecosystem improves restaurant profitability
Automating food cost calculations makes data more reliable and frees up time to focus on operations. Ratios are continuously updated, which facilitates decision-making and helps anticipate deviations.
👉 Learn more: The 8 key data points to boost your franchise's profitability in 2025
Food cost is a key indicator of performance in the restaurant industry. With rigorous management, the right tools, and trained teams, it becomes a real strategic lever.
Rather than simply accepting costs, manage them on a daily basis to build a sustainable and efficient model.
