# How To Calculate Food Cost For Restaurants To Optimize Margin Percentages There are several key steps to calculate food cost for restaurants to optimize percentages. Food cost percentage is the total money used to buy food divided by the total amount of revenue your restaurant generates. It’s an important metric to determine an establishment’s efficiency for ingredient sourcing and overall profitability. As a restaurant owner, you should know how calculate your food cost and optimize it according to your menu. This way, you can increase your wealth strategically and drive a big boost in profits. Read on to learn to calculate food cost for restaurants to optimize percentage.

## Determine Raw Food Cost

Next, determine your raw food cost total to calculate and optimize your percentage. Determine the cost of a standard quantity of each ingredient you purchase. Create an itemized recipe for each plate you serve and calculate the total cost per plate. For example, if you use \$1of pasta per dish, 2\$ in cream and 2\$ in tomato sauce, the total cost would be \$5 for the plate. Create a comprehensive list of all the recipes and their correlating prices. Surely, determine your raw food cost total to optimize your percentage.

## Use The Food Cost Formula

Further, use the food cost formula to determine your total food cost percentage. You can use cost containment strategy or use the cost of goods sold as the first part of the formula. Divide your cost of goods sold by the total revenue generated in the day. This should result in a number less than 1 which is your food cost percentage. For example, a restaurant that made \$100 on \$20 worth of raw ingredients has a food cost percentage of 20%. In short, take your cost of goods sold divided by total sales to determine your food cost formula.

## Create Solid Inventory Practices

Then, create solid inventory practices to optimize your food cost percentage. To determine your total cost of goods sold, add your beginning inventory to your purchased inventory. Then, subtract your ending inventory to see the total amount of goods that were used that day. A variable in the food cost percentage is the amount of food waste you generate. Better inventory practices will lead to more salvageable goods leftover at the end of the day. This should result in a higher value of goods sold when calculating your total cost. Definitely, create solid inventory practices to maximize the value of your ingredients.