Food cost percentage is the share of food sales that went on ingredients in the same period. It is an inventory identity, not a feeling about the menu. AKLI, the AI restaurant management software, calculates it from stock and recipes per branch. The arithmetic below is the same arithmetic, written so you can do it once by hand.
The formula
COGS is opening inventory plus purchases minus closing inventory. The method is the COGS formula.
Food cost % = COGS ÷ food sales × 100
Food sales are the retail sales of food in that same period. Keep beverage in its own percentage if you want a number a chef can act on.
A worked example
A branch counts SAR 12,000 of food at the start of the week and SAR 9,000 at the end. Deliveries during the week are SAR 8,000. Food sales are SAR 35,000.
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COGS = 12,000 + 8,000 − 9,000 = 11,000
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Food cost % = 11,000 ÷ 35,000 = 31.4%
That 31.4% is actual food cost for the week. It is not a target AKLI promises. Many full-service and fast-casual kitchens plan somewhere around the high 20s to mid 30s, and a bakery or a steakhouse will sit somewhere else. The useful question is whether 31.4% matches the menu you thought you sold. You can rerun these inputs in the food cost calculator.
Mistakes that make the percentage lie
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Counting retail value as inventory cost, which inflates stock and flatters the result.
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Mixing a calendar month of sales with a count period that ended on a different day.
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Forgetting a transfer. The commissary’s COGS falls and the outlet’s COGS rises, or the reverse, depending on which side you forgot.
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Booking a credit note in the next period. Purchases are then overstated this week.
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Including labor, packaging you do not sell as food, or beverage in the numerator.
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Using a theoretical plate cost in place of COGS and still calling it actual. That comparison is a different article.
What to do with the number
One percentage for the group hides the branch that ran a festival and the branch that ran a normal week. Split it by location, then by the dishes whose recipe cost times quantity sold does not explain the COGS. That second step is food cost variance: theoretical versus actual food cost. Ranking those dishes is food cost per dish and menu engineering. Costing one dish, with yield and the price excluding VAT, is how to cost a recipe. The same cost of sales is a line on a restaurant P&L. If you want to know how your percentage sits against published medians, the restaurant food cost statistics page links the industry surveys. They are US and Canadian figures, not a GCC target.
In AKLI the same formula is the inventory side of food cost control. Price changes flow from invoices into recipes, so you are not maintaining the plate cost in a second sheet. The product is priced per branch, not per user.
Calculate food cost percentage
Compute cost of goods sold and food cost percentage from an opening count, purchases, a closing count, and food sales for the same period.
- Align the period. Use the same start and end for the opening count, the closing count, purchases, and food sales. A week of sales against a month of invoices is not a food cost percentage.
- Value stock at cost. Opening and closing inventory are the food you counted, valued at cost, not at menu price.
- Add purchases that landed. Purchases are supplier invoices for food in that period, plus transfers in if you treat them as purchases, minus transfers out. A credit note belongs in the period it corrects.
- Divide by food sales. Cost of goods sold equals opening inventory plus purchases minus closing inventory. Food cost percentage equals that cost divided by food sales, times 100. Leave beverage out of food sales if the percentage is meant to manage the kitchen. Leave labor out of the numerator.
Questions operators ask
What is the food cost percentage formula?
Cost of goods sold equals opening inventory plus purchases minus closing inventory. Food cost percentage equals that cost divided by food sales, times 100.
What should stay out of the food cost percentage?
Opening and closing inventory are valued at cost, not at menu price. Leave beverage out of food sales if the percentage is meant to manage the kitchen. Leave labor out of the numerator.
Is the 31.4% example a target?
No. Opening stock of SAR 12,000, purchases of SAR 8,000, closing stock of SAR 9,000, and food sales of SAR 35,000 give a cost of goods sold of SAR 11,000 and a food cost of 31.4%. That figure is the week in the example. It is not a target AKLI promises.