Pricing & Costing
How to Calculate Food Cost Percentage (And What's a Good Target)
2 July 2026
Food cost percentage tells you how much of every rupee you earn on a sale is being spent on ingredients. It's one of the simplest numbers you can track, and one of the most revealing.
The formula
Food cost % = (cost of the item ÷ selling price) × 100
If an item costs you ₹25 to make and you sell it for ₹80, your food cost is (25 ÷ 80) × 100 = 31.25%.
What's a healthy target?
Most home food businesses aim for a food cost of 25-35% of the selling price. That's not a hard rule — it's a benchmark to check yourself against:
- Below 25% — your margins are healthy, or you may have room to use better ingredients or charge less to stay competitive
- 25-35% — a typical, sustainable range for most home bakeries, kitchens, and cloud kitchens
- Above 35% — worth a closer look; you may be underpricing, or ingredient costs have crept up since you last checked
Food cost % isn't the same as profit
Food cost percentage only accounts for ingredients — it doesn't include packaging, labour, delivery, platform commissions, or overhead. Two products can have the same food cost % and very different actual profit once those other costs are added. Use food cost % as one input, not the whole picture.
How to use it to set a price
If you know your ingredient cost and want to hit a specific food cost percentage, rearrange the formula:
Price = cost ÷ (target % ÷ 100)
So a ₹25 ingredient cost with a 30% target food cost gives a price of 25 ÷ 0.3 = ₹83.33.
Check your own numbers
Run your own cost and selling price through the free Food Cost % Calculator to see where you stand against the 25-35% benchmark, and what price would hit your target.