Understanding your food cost in your restaurant is very important. If you're looking for a food cost calculator, I can share with you the food cost formula. Watch this video to learn the food cost formula. 🔔 Be sure to subscribe to this channel to get alerts when I post a new tip:
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Welcome to my YouTube Channel. I am David Scott Peters, a restaurant coach and speaker who teaches restaurant operators how to cut costs and increase profits with my trademark Restaurant Prosperity Formula. Known as THE expert in the restaurant industry, I apply my no-BS style to teach and motivate restaurant owners to take control of their businesses and finally realize their full potential. Thousands of restaurants have used my formula to transform their businesses. To learn more about me and the online courses I provide, visit
I am also a coach and principal in The Largo Group, an accounting firm concentrating on the specific needs of restaurants. To learn more about the importance of accounting for restaurants, visit
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About Food Cost Formula...
When you want to find your restaurant's food cost, it would be nice to have a food cost calculator. But since that's really lacking, let's instead focus on the food cost formula so you can calculate it yourself anytime.
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What Is the Food Cost Formula?
Beginning inventory (what you started with on the shelves) +
Purchases (if it crosses your backdoor threshold in this period, it is a cost today) =
Total amount of product we could use
If you close your restaurant today, that is the money you have sitting on your shelves.
Then at the end of the period - end of week or end of month - take ending inventory to get use.
Use is what leaves the shelves - no matter how it leaves the shelves. Ideally it's sold. But it could be wasted, stolen or taken home by the owner without being recorded.
Take your gross sales (before discounts and not including sales tax) and divide it into Use.
Ultimately, the food cost formula is:
Beginning inventory + Purchases - Ending = Use/Sales = Food Cost
Knowing your food cost is important so you can put controls in place to keep your food cost in line and make the money you deserve.
Here is a link to a blog post about prime cost as well:
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