Restaurant Margin vs Food Cost

Food cost and margin are related but not identical. You can improve food cost and still miss margin if labor and overhead are unmanaged.

Food cost is one input

Food cost % only measures ingredient spend against menu price. Margin includes labor, occupancy, utilities, and other operating expenses.

Simple example

A $20 dish with $6 food cost has 30% food cost. If labor and overhead add $10, contribution left is $4, or 20% before other costs.

Use both metrics together

Track food cost to control recipes, and track margin to steer full business performance. Both should be reviewed weekly.

Common mistakes

• Assuming low food cost always means strong margin.
• Ignoring labor increases while focusing only on ingredients.
• Not separating dine-in and delivery margin profiles.