How to Calculate Food Profit Margin ?

🥗 STEP 1: Know Your Costs

Cost of Goods Sold (COGS) = Total cost of ingredients used to make the item.

💡 Example: A pizza that costs $3.50 in ingredients.

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💵 STEP 2: Set Your Selling Price

Selling Price = How much you charge customers.

💡 Example: The pizza is sold for $12.00.

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📈 STEP 3: Calculate Gross Profit

Gross Profit = Selling Price - COGS

🧮 $12.00 - $3.50 = $8.50 Gross Profit

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🔢 STEP 4: Calculate Gross Profit Margin (%)

Gross Profit Margin = (Gross Profit / Selling Price) × 100

🧮 ($8.50 ÷ $12.00) × 100 = 70.8% Gross Profit Margin

🎉 That’s a great margin!

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🧾 BONUS: Calculate Net Profit Margin (Optional)

To get a more complete picture, subtract ALL business expenses (rent, staff, utilities, etc.):

Net Profit Margin = (Net Profit / Total Revenue) × 100

💡 A good restaurant net profit margin is usually between 10%–20%.

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📊 Target Margins:

Item Type	Ideal Gross Margin
Food	60–70%
Soft Drinks	75–85%
Alcohol	80–90%

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✅ Quick Summary:

✔️ Track ingredient costs
✔️ Set smart prices
✔️ Use the margin formulas
✔️ Monitor and adjust regularly