What is the correct formula to calculate food cost percentage?

• A. (Food sales / Cost of goods sold) × 100
• B. (Cost of goods sold / Food sales) × 100
• C. (Cost of goods sold / Total sales) × 100
• D. (Gross profit / Food sales) × 100

Answer: (B)

The key idea is to express how much of every dollar earned from selling food is consumed by the cost of the food itself. To do that, use the cost of goods sold for food as the numerator and the total food sales as the denominator, then multiply by 100 to get a percentage. In other words, food cost percentage = (cost of food sold) ÷ (food sales) × 100.

This is the best choice because it directly measures the portion of revenue that must cover the ingredients and direct food costs. Using total sales would mix in beverages and other items, giving an inaccurate picture of food cost efficiency. Using a gross margin (gross profit ÷ food sales) would measure profitability, not the cost slice of revenue.

Example: if the cost of food sold is 8,000 and food sales are 15,000, the food cost percentage is (8,000 / 15,000) × 100 = 53.3%. This helps set pricing targets and control costs.