What's a good food cost percentage for an Australian restaurant, café, or catering business? Here are the industry benchmarks, how to calculate it, and the most common reasons costs blow out.
Quick answer
For most Australian restaurants and cafés, a food cost percentage of 25–35% is the healthy target range. The widely-cited 30% rule — keeping food costs below 30% of menu price — is a reliable starting point, though the right target depends on your venue type, labour model, and whether beverages subsidise your food margin.
The formula is straightforward:
Food cost % = (ingredient cost per serve ÷ sell price) × 100
Example: A lamb shank dish costs $9.80 in ingredients per serve. You sell it for $38. Food cost = (9.80 ÷ 38) × 100 = 25.8%.
Your gross margin on that dish is 74.2% — the money left after ingredient costs, before labour, rent, and other operating expenses.
Food cost percentage only measures raw ingredients. It does notinclude labour, occupancy costs, or other overheads. A complete P&L picture also requires your labour percentage (typically 30–35% of revenue in Australia) and your occupancy cost percentage (typically 5–12%).
2024 benchmarks · Australia
These benchmarks reflect the target ranges used by experienced Australian operators across each segment. "Typical" is the midpoint most well-run businesses in that category aim for.
| Venue type | Target range |
|---|---|
| Fine dining | 28–35% |
| Casual / modern dining | 25–32% |
| Café / breakfast | 24–30% |
| Pizza / fast casual | 20–28% |
| Catering / events | 25–38% |
| Pub bistro / RSL | 28–35% |
| Food trucks / street food | 28–38% |
Benchmarks are guidelines based on commonly reported targets across Australian hospitality operators. Food cost % = ingredient cost ÷ sell price × 100.
The “30% food cost rule” is the most widely cited benchmark in Australian hospitality training and industry press. The idea is simple: if your food costs stay at or below 30% of menu price, you've preserved enough gross margin to cover the other cost layers of a restaurant.
Here's how the cost stack typically looks for a well-run Australian venue:
| Cost layer | % of revenue |
|---|---|
| Food cost (ingredients) | 25–32% |
| Labour (kitchen + floor staff) | 30–35% |
| Occupancy (rent + utilities) | 5–12% |
| Other operating costs | 3–7% |
| Net profit (target) | 5–15% |
The total cost of running a venue typically lands between 75–90% of revenue. A food cost target of 30% is designed to leave enough room on the left side of that equation so that labour and rent don't put you underwater.
When is 30% too high? If your labour costs are above average (e.g. a fine dining room with a full brigade), you may need to push food costs below 28% — or adjust menu pricing to compensate. Conversely, a food truck with very low occupancy costs can tolerate a 35–38% food cost and still be profitable.
Common causes
Beef, lamb, chicken, and seafood account for the largest slice of kitchen spend in most Australian venues. These fluctuate significantly with season and wholesale market prices — a 15% jump in chicken breast prices can shift your food cost by 3–4 percentage points if you haven't repriced.
Over-portioning is the most common cause of food cost blowout. A 30g overpour of protein across 100 covers costs $270–$500 per week at typical prices. Weighed, photo-documented recipes eliminate this problem.
Industry averages suggest 4–10% of purchased food is wasted before it reaches a guest. FIFO stock rotation, mise en place discipline, and cross-utilising prep ingredients across multiple dishes are the main controls.
Many operators don't update their recipe costs when supplier invoices increase. The result is quietly eroding margins. Scanning invoices against your recipe database — either manually or with software — catches this automatically.
Pricing to a round number or matching a competitor's price rather than working backwards from a food cost target is common in smaller venues. Even $2–$3 of underpricing on a signature dish can move your food cost 2–3 points in the wrong direction.
Experienced operators track two food cost figures, not one:
What it should cost
Calculated from your recipes — if every dish was made exactly to spec with zero waste, what would your food cost be? This is your target number.
What you actually spent
Opening stock + purchases − closing stock = cost of goods used. Divide by revenue for your actual food cost percentage.
The gap between theoretical and actualis your operational loss — caused by wastage, portioning errors, theft, or spoilage. Most well-run venues accept a gap of 1–3 percentage points. If the gap is 5%+, there's a systematic problem worth investigating.
Keeping theoretical food costs accurate requires up-to-date supplier prices in your recipe database. When chicken breast goes from $13/kg to $16/kg and you haven't updated your recipes, your theoretical cost becomes meaningless — and you don't realise your menu is underpriced until the P&L hits.
Know your food cost on every dish — in real time.
Chef Pauly recalculates the moment a supplier price changes.
FAQ
For most Australian restaurants and cafés, 25–35% is the healthy range. Fine dining typically targets 28–35%, casual dining 25–32%, and cafés 24–30%. Pizza and fast-casual operations can often achieve 20–28% due to low-cost dough and sauce bases. Pub bistros usually run 28–35%, supported by bar revenue.
The 30% rule means keeping ingredient costs at or below 30% of your menu price — leaving a 70% gross margin. With labour at 30–35%, occupancy at 5–12%, and other costs at 3–7%, a 30% food cost is the threshold that keeps a typical Australian restaurant viable. It's a guideline, not a law: different venue types run above or below it based on their cost structure.
Food cost % = (ingredient cost per serve ÷ sell price) × 100. Add up the cost of every ingredient in the dish at the quantity used (not the full pack price), divide by how many serves it makes to get cost per serve, then divide by your menu price and multiply by 100. Use our free recipe cost calculator to do this automatically.
Australian caterers typically target 25–38% depending on the event type and headcount. Large set-menu events (100+ guests) can achieve 25–30% through economies of scale. Bespoke intimate events with premium produce often run 30–38%. Most experienced catering businesses target around 30% across their portfolio.
The most common causes are: (1) over-portioning — staff aren't using weighed recipes; (2) supplier prices have increased but menu prices haven't been reviewed; (3) wastage and spoilage, especially proteins and fresh produce; (4) unrecorded staff meals or theft; (5) menu items priced too low, particularly signature dishes. Start by comparing your actual vs. theoretical food cost to identify where the gap is coming from.
Recalculate whenever a key ingredient price changes — proteins, dairy, and oils can shift 10–20% in a quarter. At minimum, do a full recipe cost review quarterly and whenever you're considering a menu price change. If you use software like Chef Pauly, your food costs update automatically when supplier prices change.
Stop guessing
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