How to Reduce Restaurant Food Cost: A Practical Guide

Practical ways to reduce restaurant food cost: recipe costing, portion control, stock counts, waste tracking and smarter menu pricing, with worked examples.

Food is usually one of a restaurant's two biggest costs, alongside staff. A few percentage points of food cost can be the difference between a good month and a worrying one. The good news: most savings come from simple habits, not from squeezing suppliers or cutting quality.

Know your food cost percentage

Food cost percentage tells you how much of every sale goes on ingredients. The basic formula is:

Food cost % = (Opening stock + Purchases − Closing stock) ÷ Food sales × 100

For example, if you start the week with 40,000 worth of stock, buy 60,000 more, finish with 35,000 and sell 200,000 of food, your food cost is (40,000 + 60,000 − 35,000) ÷ 200,000 = 32.5%. The currency doesn't matter; the method works in rupees, dollars or any other currency.

Many restaurants aim for roughly 28–35%, but the right target depends on your cuisine and pricing. A pizza shop and a seafood restaurant will look very different. Track your own number weekly and focus on the trend.

Cost every recipe

Recipe costing is the single most useful thing you can do. For each dish, list every ingredient, the quantity used and the cost of that quantity.

If the wrap sells for 7.50 before tax, its food cost is 2.00 ÷ 7.50 = 26.7%. Now you know whether the price works. Don't forget to account for trim and cooking loss: if 1kg of raw chicken gives 750g of usable cooked meat, cost based on the usable yield.

Control portions

A recipe cost is only accurate if every cook follows it. Small over-portions add up quickly: an extra 20g of paneer, cheese or prawns on every plate can wipe out your margin over a month.

• Use scoops, ladles and portion cups sized to the recipe.
• Keep a scale at each station for proteins.
• Post photos of correctly plated dishes at the pass.
• Pre-portion expensive items during prep.

Count stock and track waste

Regular stock counts

Count high-value items (meat, seafood, dairy, oil, alcohol) weekly, and everything else at least monthly. Count at the same time each week, before deliveries arrive.

Compare actual vs expected usage

If your sales say you sold 200 chicken wraps (24kg of chicken) but you used 30kg, something is off: over-portioning, waste, spoilage or theft.

Keep a waste log

Put a simple sheet near the bin: date, item, quantity, reason (spoiled, dropped, returned, over-prepped). After two weeks, patterns appear. Maybe you over-prep rice on Mondays, or a dish keeps coming back.

Buy and store smarter

• Order to par levels. Set a minimum and maximum for each item and order only what brings you back to par.
• First in, first out. Label and date everything, and put new stock behind old.
• Check deliveries. Weigh and count on arrival, and reject poor quality.
• Compare suppliers periodically. Not for every item every week, but for your top 10 by spend.
• Use whole ingredients. Vegetable trim for stock, bread ends for croutons, overripe fruit for drinks or desserts.

Engineer your menu

Once you know each dish's cost and sales volume, sort your menu into four groups:

• Popular and profitable: promote these, keep quality high.
• Popular but low margin: adjust the portion, recipe or price slightly.
• Profitable but slow: improve the photo, description or position on the menu.
• Unpopular and low margin: consider removing them; they tie up stock and prep time.

A shorter menu often means less waste and fewer ingredients to manage. Try to reuse ingredients across dishes too: the same marinated chicken can feed a wrap, a rice bowl and a salad, so nothing sits unused at the back of the fridge. Small price rises on popular dishes, made once or twice a year, are usually better accepted than one big jump.

Get the team involved

Food cost is a team result. Share the weekly number with your chefs, explain what it means, and celebrate when it improves. Ask cooks for ideas: they often know which prep is wasted or which supplier's produce spoils fastest. Some owners set a simple shared goal, such as cutting the waste log by half in a month.

Use your POS to do the maths

Spreadsheets work, but they rely on someone updating them. KiwiTri POS Plus includes recipe and food-cost tracking, inventory with low-stock alerts, and analytics that show top dishes, best days and busy hours, so you can link what you sell to what you use. Item reports (on Pro and Plus) show exactly which dishes sell and when.

Published monthly prices for KiwiTri POS Plus are ₹2,999 in India (+ GST), NZ$200 in New Zealand (+ GST), A$180 in Australia (+ GST) and US$119 in the USA. It suits independent restaurants and small groups that want food-cost tools inside their POS rather than in a separate system. Tax treatment of stock and costs varies by country, so check with your accountant.

A simple 30-day plan

1. Week 1: Do a full stock count and work out last month's food cost %.
2. Week 2: Cost your 10 best-selling dishes.
3. Week 3: Introduce portion tools and start a waste log.
4. Week 4: Count again, compare, and adjust one or two prices or recipes.

Want help with the numbers? Start a free 2-day KiwiTri POS trial (no card needed), or see which plan includes food-cost tracking.

Keep reading

🌏 WORLDWIDE

Kitchen Display System Explained: KDS vs Printed KOTs

What a kitchen display system (KDS) is, how it compares with printed KOTs, and a simple step-by-step guide to setting one up in a small restaurant kitchen.

🌏 WORLDWIDE

QR Menu with Nutrition Info: Why Calories and Protein Sell

Showing calories, protein and carbs on your QR menu helps guests choose faster and order with confidence. How to add nutrition info without the extra work.

🌏 WORLDWIDE

Restaurant Table Management Tips to Turn Tables Faster

Restaurant table management tips to turn tables faster: floor plans, clear sections, a better waiter workflow and live table status, without rushing guests.