Restaurant Food Cost ROI Calculator
Discover how FMH can Increase Your Restaurant Profits
What is Food Cost ROI?
In restaurants, food cost ROI is a measure of the return on investment (ROI) compared to the money spent on ingredients. It shows whether the money invested in food and supplies is generating enough profit from sales. Unlike general ROI, food cost ROI focuses on food cost in restaurants, making it one of the most practical financial metrics for your business.
Why Calculating Food Cost Matters
Food cost is usually the largest expense for restaurants, often taking up 30–40% of sales. On top of that, 17% of COGS is lost to wastage globally. By calculating food cost carefully, you can see exactly how much money is leaking from your profits and where you can save.
Formula for Food Cost ROI?
The simplified ROI formula is:
ROI = (Gain from Sales – Food Costs) ÷ Food Costs
Example:
If your monthly sales are $50,000
COGS (food cost) is 40% = $20,000
Wastage is 17% of COGS = $3,400
Your actual cost becomes $23,400. If your profit is $26,600, the ROI is:
($26,600 ÷ $23,400) = 13.7% ROI
This shows how you can calculate return on investment ROI in a simple, clear way.
Challenges in Figuring Return on Investment in Restaurants
While the formula is simple, many restaurant owners struggle with:
Not knowing the true food wastage percentage.
Counting only ingredient costs but forgetting hidden costs (storage, spoilage, staff errors).
Using outdated food cost percentages without adjusting for inflation or supplier changes.
Not using a tool for calculation, as manual errors can be misleading.
This is why figuring return on investment using a structured tool is more reliable than rough guesses.
Why This Calculator Helps?
Simplifies calculating food cost in real numbers.
Shows how wastage affects profitability.
Helps you calculate return on investment ROI quickly without spreadsheets.
Gives a clear comparison between your current costs and potential savings.
Limitations to Keep in Mind?
ROI does not include external factors like staff performance, customer demand, or seasonal sales. However, it is a strong starting point for understanding how much profit you’re really making from your food costs.
Use the calculator today to see the food cost in your restaurant more clearly. Small improvements in wastage or supplier costs can create big changes in ROI. The insights you get here can guide you toward higher profits and smarter decisions. Contact the Food Market Hub team for better insights on increasing your restaurant profits.
