What is Food Cost Percentage?

Example

Let's break down the food cost for a dozen decorated sugar cookies. You use 1000g of flour at $0.08/100g ($0.80), 500g of sugar at $0.12/100g ($0.60), 250g of butter at $0.40/100g ($1.00), 2 large eggs at $0.30 each ($0.60), 1 tsp vanilla extract at $0.05, and 500g of royal icing mix at $0.15/100g ($0.75). The total ingredient cost for the dozen cookies is $3.80. If you sell these decorated sugar cookies for $36.00 per dozen, your food cost percentage is calculated as follows: Food Cost Percentage = ($3.80 / $36.00) x 100 Food Cost Percentage = 0.1055 x 100 Food Cost Percentage = 10.55% This 10.55% is quite low, indicating a healthy profit margin on these cookies, assuming your labor and overhead are covered. If, however, you were selling them for $24.00 per dozen, your food cost percentage would jump to ($3.80 / $24.00) x 100 = 15.83%. This is still good, but you can see how a lower selling price significantly impacts your percentage. You need to know these numbers to ensure every cookie batch contributes positively to your bottom line.