Food Cost Percentage: A Complete Guide for Australian Kitchens
The one number every chef gets asked about — what it is, how to calculate it properly (including the GST step most people skip), what to aim for by venue type, and why it quietly drifts upward between menu reviews.
Quick answer
Food cost % = (ingredient cost ÷ sell price) × 100
For most Australian venues, 25–35% is the healthy range, with 30% the common benchmark. One critical detail: use your GST-exclusivesell price (menu price ÷ 1.1) — the 10% GST on your menu price is the ATO's money, not yours.
What food cost percentage actually tells you
Food cost percentage is the share of a dish's sell price that you spend on raw ingredients. Nothing more — it excludes labour, rent, power, and everything else. That narrowness is exactly what makes it useful: it isolates the one cost the kitchen controls directly, dish by dish.
A dish at 26% food cost leaves 74 cents in every revenue dollar to pay wages (typically 30–35% of revenue in Australian venues), occupancy (5–12%), and other operating costs — and to leave a profit at the end. A dish at 38% leaves only 62 cents for the same stack, which is why a handful of underpriced signature dishes can sink an otherwise well-run menu.
Track it two ways: per dish (from your recipes — your theoreticalcost) and across the whole business (opening stock + purchases − closing stock, divided by revenue — your actual cost). The gap between the two is your waste, portioning error, and shrinkage.
Worked example
Crispy-skin barramundi — 1 serve
A typical bistro main, costed at realistic AUD wholesale rates. Quantities are per serve, and the barramundi rate is yield-adjusted for skin-on portioning loss.
| Ingredient | Cost | ||
|---|---|---|---|
| Barramundi fillet (yield-adjusted) | $6.12 | ||
| Kipfler potatoes | $0.68 | ||
| Broccolini | $0.72 | ||
| Lemon beurre blanc (sub-recipe) | $0.84 | ||
| Olive oil, butter, seasoning | $0.45 | ||
| Garnish (herbs, lemon cheek) | $0.39 | ||
| Total food cost per serve | $9.20 | ||
Prices are illustrative AUD wholesale rates. Always cost from your actual current supplier prices.
On the menu, this dish sells for $36. Here is where most spreadsheets get it wrong: that $36 includes 10% GST. Your actual revenue per serve is $36 ÷ 1.1 = $32.73.
The wrong way (GST-inclusive)
25.6%
($9.20 ÷ $36.00) × 100 — looks comfortable, but it counts the ATO's GST as your revenue.
The right way (GST-exclusive)
28.1%
($9.20 ÷ $32.73) × 100 — your true food cost, still inside the 30% benchmark but with far less headroom.
That 2.5-point difference is not academic. A menu “costed at 28%” on GST-inclusive prices is really running at almost 31% — enough to erase the net profit of a typical venue without anyone noticing why.
GST and menu pricing: the rules that affect your costing
Three GST facts every Australian operator should bake into their costing process:
Menu prices must be displayed GST-inclusive
Australian Consumer Law requires the price a customer sees to be the total price. So every menu price already contains 10% GST — divide by 1.1 to find the revenue you actually keep before calculating food cost percentage.
Cost your ingredients GST-exclusive
Many raw ingredients — fresh meat, vegetables, milk, plain bread — are GST-free as basic food. Where GST does appear on an invoice (prepared sauces, confectionery, some packaged goods), a registered business claims it back as an input tax credit. Either way, the GST component is not a food cost: always cost recipes from ex-GST prices.
Price increases need the GST step too
Working backwards from a 30% target? Sell price (ex GST) = dish cost ÷ 0.30, then multiply by 1.1 for the menu. The $9.20 barramundi needs $30.67 ex GST — a menu price of about $33.70, rounded to $34 or kept at $36 for buffer.
Get the GST handling consistent — ex-GST costs against ex-GST revenue — and your food cost percentage becomes a number you can trust and compare month to month.
Targets · Australia
Healthy targets by venue type
There is no single correct number — the right target depends on your labour model, occupancy costs, and whether beverages subsidise the kitchen. These are the ranges experienced Australian operators work to.
| Venue type | Target range |
|---|---|
| Café / breakfast | 24–30% |
| Pub bistro / RSL | 28–35% |
| Fine dining | 28–35% |
| Pizza / fast casual | 20–28% |
| Catering / events | 25–38% |
For a deeper breakdown — including the 30% rule and the full venue cost stack — see our food cost benchmarks by venue type.
The silent killer
Why your food cost drifts upward between menu reviews
Supplier price creep
The biggest one. Suppliers rarely announce increases — they just appear on the invoice. A 3–5% rise on chicken here, a 6% rise on cream there, and within a quarter your costed menu is fiction. Unless someone reconciles every invoice against the recipe database, the creep is invisible until the monthly P&L lands.
Pack size shrinkage
The price stays the same but the 2 kg tub becomes 1.8 kg. Your per-kilo rate just rose 11% and the invoice total looks identical. If your recipes are costed on pack price rather than per-gram rates, you will never see it.
Seasonal produce swings
Australian produce prices move hard with weather. Lettuce, beans, berries, and avocados can double after floods or heat events. Menus costed in May can be badly wrong by August if nobody recosts.
Untracked substitutions
The kitchen swaps a listed ingredient for a dearer alternative because the supplier shorted the order — and the recipe cost never gets updated. Multiply by a dozen quiet substitutions a month and your theoretical cost stops matching reality.
Portion drift
New cooks plate heavier. A 20g overpour of protein per plate at $16/kg is $0.32 a serve — $160 a week across 500 covers. Weighed, photographed plating specs are the control; recosting tells you when drift has crept in anyway.
Track continuously, not quarterly
The traditional approach — a big recosting exercise every quarter — guarantees you spend up to three months trading on stale numbers. If proteins rose 8% in week two, you carry that margin leak for ten more weeks before anyone organises a review.
Continuous tracking flips the trigger: instead of recosting on a calendar, you recost on evidence — every time a supplier invoice shows a changed price. The workflow is simple: invoice arrives → changed prices go into the recipe database → every affected dish recalculates → anything that has crossed your target threshold gets flagged for a price review or recipe tweak.
Done by hand, that discipline is hard to sustain through a busy service week — which is exactly the problem Chef Pauly was built to remove. Scan or photograph a supplier invoice and the AI reads the line items, spots price changes, and updates your ingredient database; every dish that uses those ingredients recosts live, so your food cost percentage is always current rather than a quarterly snapshot.
Whether you use software or a well-drilled manual routine, the principle is the same: food cost percentage is only useful when the prices underneath it are real. You can try Chef Pauly free for 14 days and see your whole menu recost from a single invoice scan.
Your food cost, recalculated on every invoice.
Chef Pauly scans supplier invoices and recosts your entire menu the moment a price changes.
FAQ
Food cost percentage questions, answered
How do I calculate food cost percentage in Australia?
Food cost percentage = (ingredient cost per serve ÷ sell price) × 100. For an accurate figure, use the GST-exclusive sell price: divide your menu price by 1.1 first. A dish costing $9.20 in ingredients and sold at $36 on the menu has a true food cost of (9.20 ÷ 32.73) × 100 = 28.1% — not the 25.6% you get from the GST-inclusive price.
Should I use GST-inclusive or GST-exclusive prices when calculating food cost?
Always GST-exclusive, on both sides. Menu prices must be displayed GST-inclusive under Australian Consumer Law, but the 10% GST belongs to the ATO — divide the menu price by 1.1 to get your real revenue. On the cost side, many fresh ingredients are GST-free anyway, and where GST is charged a registered business claims it back, so cost recipes ex GST too.
What is a good food cost percentage by venue type?
Cafés typically target 24–30%, pubs and bistros 28–35%, fine dining 28–35%, pizza and fast casual 20–28%, and catering 25–38% depending on event size. The widely cited Australian benchmark is 30% — but calibrate against your own labour and occupancy stack: a venue with high wage costs needs a lower food cost target to stay profitable.
Why does my food cost percentage keep going up?
Usually supplier price creep: small, unannounced increases on invoices that never flow back into your recipe costs or menu prices. Pack size shrinkage, seasonal produce swings, untracked ingredient substitutions, and portion drift compound it. The fix is continuous tracking — update ingredient prices from every invoice and recost affected dishes immediately, rather than waiting for a quarterly menu review.
Related resources
Related article
Food Cost Percentage Benchmarks by Venue
Target ranges for restaurants, cafés, catering, and pub bistros.
Related article
How to Calculate Food Cost Per Dish
Step-by-step recipe costing with yields, sub-recipes, and worked examples.
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