# How to Calculate Food Cost in a Restaurant

If you own a restaurant, you know the importance of calculating food cost for such things as proper pricing and inventory. Proper pricing allows you to price your dishes at profitable levels, and accurate inventory allows you to assess the value of current food levels for such things as business valuation. Additionally, your food costs represent more than just the cost of food. The cost of your food includes the cost of everything it takes to sell a plate of food, so you must factor employee costs and overhead costs into your food costs since without them, you wouldn't have any food to sell. Not knowing how to calculate food costs could threaten your restaurant's viability or throw your business value off.

## Step 1.

Make a checklist of each menu item.

## Step 2.

Add together all the single-item foods such as steaks, hamburger patties or buns by dividing the total cost of the the case amount by the number of units per case. For instance, restaurants usually buy food items by the case, so if you purchase a case of 24 burgers for $18, then your per-serving food cost for burgers equals .75 because $18 divided by 24 equals .75. The per-serving cost for single item foods represents the minimum amount you must charge for that item to break even.

## Step 3.

Calculate per-serving food cost for bulk ingredients like condiments or vegetables by dividing the volume cost of your food by the number of servings per volume. For instance, if the total volume of a bottle of mustard offers 300 servings and the total cost for the volume equals $10.95 then your per-serving cost for mustard equals 3.65 cents because $10.95 divided by 300 servings equals .0365 per serving. The per-serving cost for bulk ingredients represents the amount you must add to each menu item containing that bulk item to break even.

## Step 4.

Calculate total drink costs by adding together the amounts you paid for individual "drink units" such as bottles or cans of soda, juice, milk or beer. The cost of each drink item represents the minimum amount you must charge to break even.

## Step 5.

Calculate bulk drink costs by adding together the amounts you paid for individual case unit such as bottles or cans of soda, juice, milk or beer. Divide the cost of the case by the number of units in the case. For instance, if you purchased 24 cans of tomato juice for $4.00, then your bulk drink costs for tomato juice equals .16 because $4.00 divided by 24 equals .16. The cost of each item represents the minimum amount you must charge to break even.

## Step 6.

Calculate the per-serving cost for drink ingredients like soda syrup used in fountain drinks by dividing the total price for the syrup by the average number of servings yielded per syrup canister. For example, if your syrup canisters costs $35, and the canister rates approximately 2,000 12-ounce cups of soda, your per-serving cost for soda syrup equals .175 because $35 divided by 2,000 equals .175. The per-serving cost for your drink ingredients represents the minimum amount of money you must charge per drink to break even.

## Tip

To make a profit, multiply all your per-serving food and drink costs by a factor of four or six. Such markup allows you to cover overhead costs like labor or building rent.