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15,000 of food cost on 50,000 of sales
Inventory starts at 4,000 and purchases are 14,000. Ending inventory is 3,000. Food sales are 50,000. Pub. 334 subtracts ending inventory from the goods available for sale. Labor is not in these boxes.
Beginning inventory: 25% lower
Change beginning inventory to 3,000 while keeping the other example values the same.
Beginning inventory: 25% higher
Change beginning inventory to 5,000 while keeping the other example values the same.
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Quick answer
What does the Restaurant food cost calculate?
What share of food sales did the ingredients cost? This calculator uses beginning inventory, purchases, ending inventory, and food sales to estimate ingredient cost against food sales immediately in your browser.
With the values currently entered, the result is 30% — of food sales. It also shows food cost, gross profit on food, and ending inventory.
How to use the Restaurant food cost
- Replace the example values with your own numbers.
- Review the result and supporting figures as they update automatically.
- Check the formula and assumptions before using the estimate for a decision.
Inputs used
- Beginning inventory
- Purchases
- Ending inventory
- Food sales
Restaurant food cost formula
Food cost = beginning inventory + purchases − ending inventory. Food cost percent = food cost ÷ food sales.
Assumptions
- IRS Publication 334, chapter 6, figures cost of goods sold on Schedule C lines 35 through 42. For a merchant, that is beginning inventory plus purchases, minus ending inventory. Line 37 says labor is usually a manufacturing cost, so this page leaves labor out.
- Food sales are the sales those ingredients produced. Pub. 334 also says to remove merchandise you withdraw for personal use from purchases. A family meal left in the purchases box stays inside food cost.
Verify the inputs
Authoritative sources
These sources explain the definitions, factors, or rules behind this tool. Their geographic scope is shown because an official source for one country is not automatically valid somewhere else.
Sources do not endorse Calculum. Check the source date, scope, and your own documents before making a financial, tax, insurance, or reporting decision.
Practical guide
Restaurant food cost example and edge cases
Restaurant food cost divides ingredient cost by food sales. IRS Publication 334 figures that cost from inventory. Beginning inventory plus purchases, minus ending inventory, is the merchant formula in chapter 6. Put labor on the prime cost page.
Example: 15,000 of food cost on 50,000 of sales
Inventory starts at 4,000 and purchases are 14,000. Ending inventory is 3,000. Food sales are 50,000. Pub. 334 subtracts ending inventory from the goods available for sale. Labor is not in these boxes.
- Beginning inventory
- 4,000
- Purchases
- 14,000
- Ending inventory
- 3,000
- Food sales
- 50,000
Calculated result30%of food sales
Goods available are 18,000. Subtract the 3,000 still on the shelf and the food cost is 15,000. That is 30 percent of 50,000 in food sales. Gross profit on those sales is 35,000 before labor and overhead.
Example results use the default display profile. The calculator above follows your selected country and units.
How to read the result
- Read the percent first. The 15,000 food cost is beginning inventory plus purchases, minus what is still on the shelf. Gross profit on the 50,000 of food sales is 35,000 before labor and overhead.
- Pub. 334 wants ending inventory valued the same way as beginning inventory. A retail price in the ending box, while the beginning box is at cost, makes the food cost smaller than the ingredients you used.
Edge cases worth checking
A family meal came out of the walk-in
Pub. 334 says to remove merchandise you withdraw for personal use from purchases. A family meal taken from the walk-in is that kind of withdrawal. Leave it in purchases and the food cost includes food you did not sell.
Drink sales are in the food sales box
This percent divides food cost by the sales you type. Bar sales in that box, with no beverage cost beside them, pull the percent down. Use food sales when the cost boxes are only ingredients.
What changes the result most
Beginning inventory
Use a current amount for beginning inventory. Include fees or recurring costs that belong in the same figure.
Purchases
Use a current amount for purchases. Include fees or recurring costs that belong in the same figure.
Ending inventory
Use a current amount for ending inventory. Include fees or recurring costs that belong in the same figure.
Try a different scenario
Small changes show whether the answer is stable or sensitive.
Beginning inventory: 25% lower
3,00028%of food sales
Beginning inventory: 25% higher
5,00032%of food sales
Purchases: 25% higher
17,50037%of food sales
Common mistakes
Check beginning inventory
IRS Publication 334, chapter 6, figures cost of goods sold on Schedule C lines 35 through 42. For a merchant, that is beginning inventory plus purchases, minus ending inventory. Line 37 says labor is usually a manufacturing cost, so this page leaves labor out. Make sure this matches the number you enter.
Keep food sales consistent
Food sales are the sales those ingredients produced. Pub. 334 also says to remove merchandise you withdraw for personal use from purchases. A family meal left in the purchases box stays inside food cost. Use the same units and time period throughout the calculation.
Do not rely on one restaurant food cost scenario
Run a cautious case and an optimistic case. The range is often more useful than one exact-looking number.
Use this result well
What share of food sales did the ingredients cost?
It does not replace a quote, contract, accountant, or local employment guidance.