How to Calculate Food Cost Percentages in the UK

With rising ingredient costs and guests keeping a close eye on menu prices, understanding your food cost percentage is essential. This guide breaks down exactly how to calculate your food cost percentage, why it matters, and how to use it to make smarter menu decisions, improve your margins, and build guest trust.

Why Food Cost Percentages Matter in UK Restaurants

Running a profitable hospitality business in the UK isn’t just about quality service — it’s about having a clear grip on the numbers that underpin your success. One of the most important metrics? Your food cost percentage. This figure helps you see exactly how much you’re spending on ingredients compared to your food sales, and whether your pricing supports your bottom line.

And in today’s climate — where 78% of UK consumers say dining out has become too expensive to do regularly — understanding how to cost your food properly can mean the difference between thriving and just getting by (source: Voice of the Restaurant Industry in the UK).

What is Food Cost Percentage and Why is it Important?

Your food cost percentage is a key component of your prime costs (food + labour) and helps you assess how efficiently your restaurant is operating. UK restaurateurs are especially concerned with profitability and waste management, with improving profitability and managing business finances listed as top priorities.

Calculating your food cost percentage regularly ensures your pricing strategy makes sense, your margins stay healthy, and you can adapt quickly to ingredient price fluctuations — a key concern as 88% of UK diners believe ingredient costs are driving up menu prices.

The Formula For Food Cost Percentage

The standard calculation is:

Food Cost Percentage = (Cost of Goods Sold / Total Food Sales) × 100

To get an accurate figure:

• Record your opening inventory

• Add any new purchases

• Subtract your closing inventory

• Divide by your total food sales (from your POS system)

This gives you a reliable, repeatable process to track over time.

What’s a Good Food Cost Percentage?

While there’s no one-size-fits-all answer, most full-service restaurants in the UK aim for 28–32% as a benchmark. But don’t rely on a single percentage — factor in your specific concept, food quality, and location. 

Why Tracking Food Cost Percentage Pays Off

1. You’ll Spend and Earn Smarter

Understanding your food cost percentage helps you price your menu more strategically. That means promoting profitable dishes and tweaking or dropping ones that don’t pull their weight.

2. You Can Design a More Profitable Menu

Use insights from your POS system to run menu engineering reports and update seasonal or weekly specials based on profitability.

3. You’ll Have More Control During Cost Fluctuations

According to the Voice of the Restaurant Industry UK report, labour, food and occupancy costs now each account for around 10–15% of spend. Having real-time data helps you avoid underpricing, over-portioning, or absorbing supplier increases.

Ingredient Costs, Portion Sizes, and Transparency: What UK Diners Want

It’s not just your numbers that matter — it’s how you communicate them. According to the Toast Consumer Preferences Survey 2025, where 200 UK diners were surveyed about restaurant pricing and value:

• 73% of UK consumers prefer restaurants that show cost transparency, like sourcing information or price breakdowns.

• 81% say they notice price increases, and many are put off when portion sizes shrink without explanation.

• 66% are willing to pay more for local or sustainable ingredients — but only if you show the value.

Pro tip: Feature local ingredients clearly on your menu and offer a short explanation of your sourcing policy online. This builds trust — especially important when 43% of guests say they’re very likely to avoid a restaurant if they suspect overpricing.

Bringing it All Together: Food Costs, Pricing Strategy and Profit

Your food cost percentage is more than a financial formula — it’s a strategic tool. Restaurants that track it regularly can make sharper pricing decisions, better plan their inventory, and run leaner, smarter kitchens.

At a time when diners are tightening their budgets but still expect quality, understanding and clearly communicating your pricing strategy — especially when using premium ingredients — is what sets you apart.

Next Steps for UK Restaurant Operators

• Review your ingredient costs monthly

• Use POS-integrated analytics to track COGS

• Share your sourcing and pricing logic with guests

• Offer seasonal menus that balance margin and value

• Train staff on menu profitability and customer communication