Food Cost Calculation? What to Include in Food Cost

When it comes to running a restaurant, knowing your food cost is key to staying profitable. But here’s the catch—not everything on your supplier invoice should count as food cost.

Let’s break it down, nice and easy.

What’s on a Typical Invoice?

A supplier invoice might list all sorts of items you’ve ordered—like:

• Meat, seafood, dairy, produce (your food staples)

• Wine, beer, soft drinks (your beverage stock)

• Paper products, cleaning supplies, gloves, foil (necessary, but not edible!)

And this is where things get tricky.

Not All Items Belong in Food Cost

If you’re including everything from dish soap to napkins in your food cost calculation, your numbers are going to look way off.

Food cost = only items that are food and beverage. Things like:

• Meat, poultry, seafood

• Dairy, produce, dry goods

• Wine, beer, soda, juices

Also included in food cost are disposables and packaging directly related to preparation and serving of food including those for food delivery.

Do not include:

• Chemicals, janitorial items

• Paper goods, disposables

• Equipment or non-consumables

These go under “operating expenses,” not food cost.

Why It Matters

When you mix categories, your food cost % will be higher than it actually is—and that can lead to bad decisions, like raising prices or cutting portions unnecessarily.

Keeping your categories clean helps you:

• Know your true food cost

• Compare apples to apples (literally!)

• Track trends more accurately

• Make smarter menu and pricing decisions

Final Bite

Think of it this way: if it doesn’t go on the plate (or in the glass) with a few exceptions, it doesn’t belong in your food cost. Our software helps you auto-categorize everything on your invoices so your reports stay sharp and stress-free. Ready to get your food cost dialed in? Let’s make it easy (and accurate).

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DISCLAIMER: This information is provided for general informational purposes only, and publication does not constitute an endorsement. cactus does not warrant the accuracy or completeness of any information, text, graphics, links, or other items contained within this content. cactus does not guarantee you will achieve any specific results if you follow any advice herein. It may be advisable for you to consult with a professional such as a lawyer, accountant, or business advisor for advice specific to your situation.