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Cafe numbers · guide

What food cost percentage should a cafe aim for?

Food cost percentage is the single most useful number a cafe owner tracks. Get it right and every dish on the menu pays its share of the rent. Get it wrong and the bestsellers quietly drain the bank account while looking like winners on the menu. The standard answer (28 to 35%) is a starting point, not the answer for your cafe.

A HospoSure guide for cafe owners · 8 min read

Food cost percentage is the most reported, most misunderstood number in cafe operations. Owners chase it as if it were a target in itself. It is really the result of decisions made upstream: which ingredients you buy, how you portion, how you price, and what mix of dishes customers order.

This guide covers the food cost percentage Australian cafes should target, why the standard 28 to 35% rule misleads owners, and the four levers that move the number.

Step 01 · target

The food cost percentage Australian cafes target

Australian cafes typically target a food cost of 28 to 35% on food dishes, and a blended whole menu figure of about 28%. That blended number hides significant variation by category. Coffee runs much lower because the margin on a Flat White is structurally generous. Food sits at the higher end because the ingredient cost on a brunch dish is structurally tight. Batched cold drinks land in the middle.

Typical food cost percentage by category
Coffee (espresso drinks)15 to 25%
Tea, hot drinks10 to 20%
Batched cold drinks (juice, kombucha, smoothies)20 to 30%
Sweets and pastries30 to 40%
Breakfast and lunch food28 to 35%
Premium hero dishes35 to 45% (priced for prestige, not margin)
Blended whole menu target26 to 30% (28% target)

The right blended target depends on your menu mix. A cafe that does 70% coffee revenue can run a higher food cost on the food without breaking the bottom line, because the coffee margin carries the cafe. A cafe that does 70% food revenue needs tighter food cost across every dish.

Worth knowing

Premium hero dishes often run a higher food cost on purpose. A signature wagyu sandwich at 40% food cost can be the right call if it draws customers, lifts average spend, and creates the cafe's identity. Food cost percentage matters across the menu, not on every individual dish.

Step 02 · calculation

How to calculate food cost properly

The basic formula is simple: ingredient cost divided by sell price ex GST, multiplied by 100. The accuracy depends entirely on whether the ingredient cost is real.

Worked example: Smashed Avocado
Avocado (yielded weight, supplier price)$3.20
Sourdough (per slice yielded)$0.90
Feta, herbs, oil, lemon$1.80
Garnish, salt, pepper$0.30
Total ingredient cost$6.20
Sell price$22.00
Food cost percentage28.2%

The two mistakes that wreck the number

Costing on purchased weight, not yielded weight. One kilogram of avocado in the box does not give you one kilogram of plated avocado. Trim, browning, and seed loss take roughly 25 to 35% off. Cost the yield, not the purchase, or the food cost number lies to you.

Using supermarket prices instead of wholesale invoice prices. A litre of Coles home brand milk is around $1.75 in a 2 litre bottle. The same litre delivered by a hospitality supplier in commercial volumes lands closer to $1.80 to $2.20 once delivery is loaded in. The gap matters more than first time founders realise.

Step 03 · benchmark

Why the 28 to 35% benchmark misleads founders

The 28 to 35% rule is the most repeated number in cafe advice. It is also the rule that misleads first time founders the most, because it implies there is a single right answer. There is not.

Three reasons the benchmark is incomplete on its own.

It ignores your overheads

A main street cafe paying $80,000 a year in rent cannot run the same food cost as a back street cafe paying $30,000. The rent has to come from somewhere. Either the food cost is tighter (smaller portions, cheaper ingredients) or the prices are higher. The benchmark assumes average overheads, which means it fits no one exactly.

It ignores your menu mix

A cafe doing 70% coffee revenue has different economics to a cafe doing 70% food revenue. The first can run a higher food cost on the food and stay healthy because the coffee margin carries the load. The second needs tighter food cost across the board.

It ignores what you are trying to be

A premium signature cafe might run higher food cost intentionally, using better ingredients to justify higher prices and create reputation. A high volume cafe might run lower food cost by design, with smaller portions and faster service. Both can be profitable. The benchmark assumes one model.

Worth knowing

Set your target food cost from your overheads first, then check it against the benchmark, not the other way around. If your overheads point to a 28% target and the benchmark says 25 to 35, you are aligned. If your overheads point to 22% and you are running at 32, you have a problem the benchmark cannot see.

Step 04 · levers

The four levers that move food cost

Food cost percentage drifts up for four reasons, and each has a different fix. Find the lever that is moving and you can make a targeted fix instead of a panicked menu rewrite.

Lever 1: ingredient prices

Food prices move continuously. Eggs rose 18.6% in the year to April 2025, according to the ABS Monthly CPI Indicator. Coffee, dairy, and seasonal produce shift week to week. If food cost is creeping up and recipes have not changed, ingredient prices are the most likely cause. The fix is to re-cost the affected dishes and adjust prices, swap suppliers, or modify the recipe.

Lever 2: portion creep

Portion sizes drift larger over time at the prep bench. Cooks add an extra slice, a slightly bigger pour, an extra garnish. Each one looks generous. Together they wreck the food cost. The fix is portion control: written specs, portion scales on the prep bench, and weekly checks that plates go out consistent.

Lever 3: waste

Waste typically runs 4 to 8% in a well run cafe. Above 10% and food cost percentage starts to suffer noticeably. Track waste separately for one week to find the source: spoilage from ordering too much, prep loss from poor knife skills, plate waste from oversized portions, or staff meals not budgeted in. Each has a different fix.

Lever 4: menu mix

Customer ordering patterns shift seasonally. If customers are ordering more of your expensive dishes and fewer of your cheap ones, blended food cost rises even though no single dish has changed. Menu engineering (putting the more profitable dishes where eyes land) corrects this without touching prices.

Step 05 · rhythm

Track food cost weekly, not monthly

The cafes that hold food cost steady over a year track it weekly, not at the end of the month when it is too late to correct. Sunday afternoon is the standard slot: the week's data is fresh and the cafe is quiet enough to work uninterrupted.

Weekly food cost rhythm
Update prices on the 10 most used ingredients5 minutes
Check delivery invoices against last week's prices3 minutes
Review Square sales mix by category5 minutes
Check waste log against target2 minutes
Note any dishes drifting above target food cost3 minutes
Total time per week~18 minutes

Twenty minutes a week is the difference between catching small drifts and discovering at the end of the month that a dish has been losing money for four weeks.

Where HospoSure fits

HospoSure makes the weekly food cost rhythm quicker. Update a supplier price once and every dish that uses it recalculates, and Square sales show how much of each dish you actually sell. The weekly check gets much shorter, and small drifts show up before they cost you a month.

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Step 06 · context

Where food cost fits in the bigger picture

Food cost percentage is one number among several that determine whether a cafe pays the rent. The full picture includes wage cost percentage (typically 28 to 30% of revenue), occupancy cost percentage (rent and outgoings, typically 8 to 12%), and net profit margin (a common guideline is 5 to 10% from year two).

If food cost is on target but the cafe is still not making money, the problem is somewhere else: wages too high, rent too high, average spend too low, or revenue too thin. Food cost is the easiest of these to diagnose and the easiest to act on, which is why it gets attention. It is not the only number that matters.

Cafe operating ratios (industry guidelines)
Food cost (blended)26 to 30%
Wage cost (incl. super, on-costs)28 to 30%
Rent and outgoings8 to 12%
Other operating expenses15 to 20%
Net profit margin (year 2 onward)5 to 10%
Recap

What good food cost management looks like

A cafe that has food cost under control:

  1. Targets food cost by category, not as a single blended number (coffee 15 to 25, food 30 to 40, blended 25 to 35).
  2. Costs every dish on yielded weight against real wholesale invoice prices, not purchased weight against supermarket prices.
  3. Sets the target from overheads first, then checks against the benchmark, not the other way around.
  4. Knows which of the four levers (prices, portions, waste, mix) is moving when food cost drifts.
  5. Tracks food cost weekly, not at the end of the month, so small drifts get caught before they become big ones.
  6. Pairs the food cost number with wage cost, occupancy, and profit margin, not in isolation.

Get all six right and the food cost number stays steady through supplier shifts, seasonal mix changes, and the small drifts that quietly cost cafes their margin.

Once food cost is under control, the next step is turning true cost into a final menu price. See the cafe menu pricing guide for the six step method, and the cafe management tools guide for where POS and rostering fit once the numbers are right.

Common questions

Common questions about cafe food cost

What is a good food cost percentage for a cafe in Australia?

Australian cafes typically target 28 to 35% food cost on food dishes. Coffee runs much lower (15 to 25%) and batched cold drinks land in the middle (20 to 30%), so a well run cafe's whole menu blends to about 28% (26 to 30%). The right target for your cafe depends on overheads, location, and menu mix, not the industry average.

How do I calculate food cost percentage for a cafe?

Divide the COGS of a dish by its sell price ex GST, then multiply by 100. A burger with $4.20 of ingredients on a $14 menu price ($12.73 ex GST) has a food cost of 33%. The number is only useful if the ingredient cost reflects what you pay your wholesale supplier including yield loss and trim, not supermarket prices.

Why is my food cost percentage higher than the benchmark?

Four likely reasons. Ingredient prices have moved since the menu was last costed. Portion sizes have crept up at the prep bench. Waste is higher than you assumed. The menu mix shifted toward more expensive items. Track each separately, because the fix depends on which one is driving the number up.

What is the difference between food cost and true cost?

Food cost is COGS divided by the sell price ex GST, so a 30% food cost is a 70% GP. True cost adds the dish's share of overheads and labour (rent, wages, utilities), counting wages once. A dish with a 28% food cost can have a true cost of 55 to 65% once overheads and labour are loaded in. True cost is the number that shows up in your bank account at the end of the month.

How often should a cafe update its food cost calculations?

Weekly for volatile ingredients (eggs, dairy, oil, seasonal produce). Monthly for everything else. Australian wholesale prices move continuously, and a menu costed in autumn can drift below margin by spring without a single line on it changing. Make the re-cost a regular habit. Ten minutes on a Sunday handles it.

Should I aim for a low food cost percentage?

Not at any cost. Driving food cost too low usually means smaller portions, cheaper ingredients, or both. Both can hurt customer experience and reduce average spend per visit. The right target is the one that lets each dish carry its overhead and still feel generous. Underpriced premium ingredients on hero dishes can be the right call even if the food cost percentage looks high.

How does food cost percentage affect cafe profit?

Every percentage point of food cost above target takes roughly 1% of revenue off the bottom line. For a cafe doing $1 million in annual revenue, a five point food cost overrun (35% instead of 30%) costs $50,000 a year. That is a chef's wage, or the difference between paying yourself and not.

Next step

Track food cost against your real numbers

HospoSure costs every dish against your real overheads, recalculates every dish when you update a supplier price, and shows the food cost and margin on each one. It keeps the weekly check on margins out of a spreadsheet.

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