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Food Cost & Inventory

Food cost is the number that moves fastest and hides the best. These guides work from the formula outward: know the percentage, then find where the difference between what a plate should cost and what it actually costs is going.

Start here

Read these 5 in order if the subject is new to you.

  1. How to Calculate Food Cost Percentage (With Formula & Examples)The exact food cost percentage formula, three worked examples, the benchmarks by restaurant type, and a step-by-step plan to bring a high number down.
  2. How to Cost Out a Recipe Step by StepRecipe costing tells you exactly what a dish costs to make so you can price it for profit. Here's the step-by-step method with a worked example.
  3. Understanding Theoretical vs. Actual Food CostTheoretical food cost is what dishes should cost; actual is what they really cost. The gap is money leaking out. Here's how to find it and close it.
  4. How to Do a Weekly Inventory in Under an HourWeekly inventory is where food cost control lives — but only if it's fast enough to actually happen. Here's how to get a full count done in under an hour.
  5. How to Set Par Levels for InventoryPar levels tell you how much of each item to keep on hand so you never run out or over-order. Here's the formula, a worked example.

Tools for this section

All 35 guides in this section

01 How to Reduce Dairy and Butter Costs at Your RestaurantCut dairy, butter, cheese and cream costs with smarter buying, portioning, substitutions and menu tweaks before the holiday baking and sauce rush hits. Worksheet5 min 02 How to Build a Vendor Price Comparison Sheet for Your RestaurantBuild a vendor price comparison sheet that shows which supplier is cheapest per item and how much you save each year, with a free Excel template. Worksheet4 min 03 How to Reduce Takeout Packaging Costs at Your RestaurantCut takeout packaging costs without hurting food quality. Learn to cost each container, right-size, negotiate with suppliers and charge smartly. Worksheet4 min 04 How to Handle Egg Price Spikes at Your RestaurantEgg prices swing fast. Learn how to cost your egg dishes, adjust prices, change recipes and protect your margin when egg costs spike. Free calculator. Worksheet4 min 05 How to Control Turkey, Ham and Prime Rib Costs During the HolidaysHoliday proteins like turkey, ham and prime rib swing in price fast. Learn how to order, portion and price them so the season stays profitable. Worksheet4 min 06 How to Do a Year-End Restaurant Inventory CountLearn how to run a year-end restaurant inventory count for taxes and accurate COGS, with a step-by-step process and a free valuation worksheet. Worksheet3 min 07 How to Calculate Cost of Goods Sold (COGS) for Your RestaurantCalculate restaurant COGS with one formula: beginning inventory plus purchases minus ending inventory. Includes an example and a free Excel calculator. Worksheet3 min 08 How to Handle Rising Coffee Prices at Your RestaurantGreen coffee is up sharply on tariffs and tight supply. How to recost your cup, reprice without losing regulars, and protect one of your best margins. Worksheet5 min 09 How Tariffs Affect Your Restaurant's Food CostsTariffs drove higher food costs for 68% of restaurant operators. Here's how to find your import exposure, swap what you can, and reprice what you can't. Worksheet5 min 10 How to Handle High Beef Prices at Your RestaurantBeef is at record highs and the cattle herd is the smallest since the 1950s. Here's how to reprice, re-spec, and re-engineer your menu before beef eats your margin. Worksheet6 min 11 Yield Testing: Why Your Recipe Costs Are WrongIf you cost recipes by purchase price, your numbers are wrong — trim and shrink mean you use more than you buy. Yield testing fixes it. Here's how to run one. Worksheet3 min 12 Understanding Theoretical vs. Actual Food CostTheoretical food cost is what dishes should cost; actual is what they really cost. The gap is money leaking out. Here's how to find it and close it. Worksheet3 min 13 Understanding Food Cost Variance ReportsA food cost variance report shows the gap between what you should have used and what you did. Here's how to read one and turn the variance into recovered margin. Worksheet3 min 14 Setting Up a Prep List That Reduces WasteA prep list built from sales forecasts — not habit — is one of the simplest ways to cut waste. Here's how to build a par-based prep system your kitchen will follow. Worksheet3 min 15 Reducing Food Waste in Your Restaurant: 15 Proven TacticsFood waste is money in the trash. These 15 proven tactics help restaurants cut waste, lower food cost, and protect margins — starting with a two-week waste log. Worksheet3 min 16 Portion Control: Tools and Techniques That Save MoneyPortion control is the cheapest way to lower food cost without changing your menu. Here are the tools, techniques, and spec cards that keep every plate consistent. Worksheet3 min 17 Negotiating Better Prices With Your VendorsYou have more leverage with food vendors than you think. How to prepare, what to ask for, and the tactics that lower your invoice without souring the relationship. Worksheet3 min 18 Menu Engineering to Lower Food CostMenu engineering sorts your dishes by profit and popularity so you can promote the winners and fix the losers. Worksheet3 min 19 Inventory Management Software: What to Look ForThe right inventory software cuts counting time and catches food cost leaks automatically. Here's the feature checklist and what actually matters for independents. Worksheet3 min 20 How to Track Waste With a Waste LogA waste log turns invisible losses into a number you can act on. Here's how to set one up, what to record, and how to turn two weeks of data into lower food cost. Worksheet3 min 21 How to Set Par Levels for InventoryPar levels tell you how much of each item to keep on hand so you never run out or over-order. Here's the formula, a worked example. Worksheet3 min 22 How to Reduce Your Produce SpoilageProduce spoils faster than anything in your walk-in. Here's how to cut produce waste with tighter ordering, proper storage, and rotation that actually gets followed. Worksheet3 min 23 How to Prevent Kitchen Theft and ShrinkageKitchen theft and shrinkage quietly inflate food cost. The controls that catch and prevent it — receiving, inventory, POS — without policing your team. Worksheet3 min 24 How to Manage Seasonal Ingredient CostsSeasonal price swings can wreck a fixed menu's margins. Here's how to plan around them with seasonal menus, smart substitutions, and forward buying. Worksheet3 min 25 How to Handle Rising Ingredient PricesWhen ingredient prices spike, waiting to react costs you margin every day. Here are seven proven moves to protect your food cost without alienating guests. Worksheet3 min 26 How to Do a Weekly Inventory in Under an HourWeekly inventory is where food cost control lives — but only if it's fast enough to actually happen. Here's how to get a full count done in under an hour. Worksheet3 min 27 How to Do a Restaurant Inventory Count the Right WayA restaurant inventory count is only useful if it's accurate and consistent. Here's the step-by-step process, the right frequency, and how to avoid costly errors. Worksheet3 min 28 How to Cost Out a Recipe Step by StepRecipe costing tells you exactly what a dish costs to make so you can price it for profit. Here's the step-by-step method with a worked example. Worksheet3 min 29 How to Conduct a Food Cost AuditA food cost audit finds exactly where your margin is leaking. Follow this step-by-step audit checklist to pinpoint waste, over-portioning, and pricing gaps. Worksheet3 min 30 How to Choose and Manage Food SuppliersThe right suppliers protect your food cost, quality, and consistency. How to vet vendors, structure your supplier mix, and manage the relationship long-term. Worksheet3 min 31 FIFO and Proper Food Storage RotationFIFO — first in, first out — is the storage rotation method that cuts spoilage and keeps you food-safe. Worksheet3 min 32 Calculating Cost per Ounce and per ServingCost per ounce and per serving is the building block of every recipe cost. Here's how to convert any purchase unit into a per-serving cost, with worked examples. Worksheet3 min 33 Bulk Buying: When It Saves and When It WastesBuying in bulk feels like saving money, but for perishables it often costs more in spoilage than it saves. Worksheet3 min 34 Building Vendor Relationships That Pay OffA strong vendor relationship gets you better prices, first pick on short supply, and faster credits. Here's how to build partnerships that actually lower your costs. Worksheet3 min 35 How to Calculate Food Cost Percentage (With Formula & Examples)The exact food cost percentage formula, three worked examples, the benchmarks by restaurant type, and a step-by-step plan to bring a high number down. Worksheet6 min
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