In our daily lives, we often need to calculate food cost percentages in Excel. Especially when there are a lot of sales going on in the restaurants, they need to calculate their monthly profit over food sales. Using Excel, we can easily create a food cost percentage formula. In this article, I will show you three simple examples to create a food cost percentage formula in Excel. So, let’s start the article and explore these examples.
What Is Food Cost Percentage?
In general, the food cost percentage is the percentage of your budget that goes toward purchasing inventory items like food and beverage supplies for a restaurant. In addition, it is also known as the ratio of inventory cost and total revenue, and it is always represented in percentages. Fortunately, it is quite simple and easy to calculate the food cost percentage. Moreover, a healthy percentage can vary significantly depending on the goods you offer, how much you can control the cost of your meals, and the market you service.
Why Is Food Cost Percentage Important?
Usually, restaurant food cost percentages enable owners to keep track of both total expenses and pricing for specific ingredients, enabling them to make data-driven decisions for spending that are both efficient and profitable.
- Firstly, you can easily manage your menu and select update them, which is no longer profitable.
- Secondly, you can experiment with diversified dishes and adjust the recipes.
- Thirdly, if you set the price of the menu according to the food cost percentage, it helps you to identify items that are more profitable.
- Finally, it will help you to understand how the supply of inventory creates an impact on both your costs and profitability.
What Is the Formula for Calculating Food Cost Percentage?
The cost of products sold is multiplied by the earnings or revenues from the final dish to arrive at the food cost percentage. Moreover, the sum of money spent on supplies and inventory over a specific time period is the cost of selling the items. However, you can easily calculate the food cost percentage in Excel by using the following formula.
Food Cost Percentage = (Inventory of Food and Beverage at the starting + New Purchases – Inventory at the Ending) ÷ Total Revenue
How to Use Food Cost Percentage Formula in Excel: 3 Suitable Examples
This section of the article will teach you three simple and tricky examples of how to calculate the food cost percentage formula in Excel. Moreover, I should not mention that I have used the Microsoft Excel 365 version for this article; you can use any other version according to your convenience.
1. Calculating Total Food Cost Percentage Formula for Cost per Meal
In this example, I will show you some easy steps in order to calculate the total food cost percentage formula for cost per meal. For the purpose of demonstration, I have used the following sample dataset. However, I have taken the inventory details and total revenue of a restaurant for the month of September 2022 to calculate the food cost percentage for cost per meal.
📌Â Steps:
- At first, select cell C8.
- Then, write the following formula into the formula bar and press Enter.
=C5+C6-C7
- Again, enter the following formula in cell C12.
=C8/C10
- Lastly, press the Enter key to get the total food cost percentage.
Interpretation of the Result
The output indicates that 43% of the restaurant’s total revenue is eaten by the customers as their meals.
Read More: How to Show One Number as a Percentage of Another in Excel
2. Calculating Actual Food Cost Percentage per Dish
Often, we need to calculate the actual food cost percentage per dish, which will enable you to know the net profitability of a particular dish. For the purpose of demonstration, I have chosen Mixed Fried Rice as a sample dish from the same restaurant and collected details for the item.
📌Â Steps:
- Firstly, select cell C10.
- Secondly, write down the following formula and press the Enter
=SUM(C5:C9)
Here, I have used the SUM Function.
- Thirdly, write the following formula in cell C14.
=C10/C12
- Finally, hit the Enter key in order to receive the actual food cost percentage per dish.
Interpretation of the Result
In this case, the final result shows how much a dish costs and the amount of profitability for a particular dish. Here, it is marked as 37%.
3. Calculating Ideal Food Cost Percentage
Last but not least, I will show you some easy steps to calculate the ideal food cost percentage. However, I have selected the same restaurant and the Total Food Cost and Total Sales of Food for the month of September 2022.
📌Â Steps:
- Initially, select cell C7.
- Secondly, enter the formula below.
=C5/C6
- Finally, hit the Enter button in order to find the ideal food cost percentage.
Interpretation of the Result
Here, the final output represents 32% of the total sales of food used for total food cost.
💬 Things to Remember
- First of all, select Currency as the Number format of the Value column.
- You can change the format style from the Format Cellsdialog box.
- Lastly, keep the Number format as Percentage where you want the final Food Cost Percentage.
Download Practice Workbook
You can download the workbook used for the demonstration from the download link below.
Conclusion
These are all the steps you can follow to create a food cost percentage formula in Excel. Hopefully, you can now easily create the needed adjustments. I sincerely hope you learned something and enjoyed this guide. Please let us know in the comments section below if you have any queries or recommendations.
Related Articles
- Calculate Percentage Using Absolute Cell Reference in Excel
- Calculate Percentage in Excel VBA
- How to Calculate Percentage of Filled Cells in Excel
- How to Apply Percentage Formula for Multiple Cells in Excel
- IF Percentage Formula in Excel
- How to Calculate Contribution Percentage with Formula in Excel
- How to Calculate Percentage for Multiple Rows in Excel
- How to Calculate Percentage above Average in Excel
- How to Apply Percentage Formula in Excel for Marksheet
- How to Calculate Variance Percentage in Excel
<< Go Back to Percentage Formula Examples | Calculating Percentages | Calculate in Excel | Learn Excel
Get FREE Advanced Excel Exercises with Solutions!
how can the cost even in different form every time I checked into it
Hello NISHANTH VJ,
Thank you for your concern. Though I am afraid I am having trouble understanding the query clearly. Assuming you wish to modify the formula to account for the cost even in different forms every time you check in, you can use the weighted average cost of goods sold (COGS) method. This method calculates the average cost of all goods sold during a period, taking into account the varying costs of different ingredients.
The formula:
Food Cost Percentage = (Total Cost of Goods Sold ÷ Total Revenue) x 100To calculate the total cost of goods sold, you can use the following formula:
Total Cost of Goods Sold = (Beginning Inventory + Purchases - Ending Inventory) x Weighted Average Cost per UnitTo calculate the weighted average cost per unit, you can use the following formula:
Weighted Average Cost per Unit = Total Cost of Goods Available for Sale ÷ Total Units Available for SaleBy using this modified formula, you can account for the fluctuations in the cost of food and beverage and calculate your food cost percentage accurately, even if the cost of ingredients varies over time.
Regards,
Yousuf Khan Shovon