Top Food Cost Tracking Mistakes Restaurants Make

In the fiercely competitive US restaurant industry, tight profit margins mean that every dollar counts. On average, food and labor each account for roughly one-third of a restaurant’s sales, leaving only around a 5% profit margin. 

Small mistakes in tracking food costs can thus make the difference between profit and loss. In fact, nearly 38% of restaurants weren’t profitable in 2023, with 97% of operators citing higher food costs as a major challenge. 

From fast food outlets to fine dining establishments, controlling food cost is critical. Yet inventory management is statistically the number-one challenge for restaurants. This article explores the top food cost tracking mistakes restaurants make, across all restaurant types, and offers guidance on avoiding them. 

By recognizing these common pitfalls – and leveraging the right tools and practices – any restaurant can tighten control of its food costs and protect its thin margins.

Mistake 1: Neglecting Regular Inventory Counts and Audits

One of the most fundamental mistakes in food cost tracking is failing to conduct regular, accurate inventory counts. If you don’t know what stock you have and what’s being used, you’re essentially flying blind on food costs. 

Unfortunately, many restaurants only take inventory infrequently (or not at all), leading to surprises like missing product, unexpected spoilage, or food cost spikes that could have been caught earlier. 

Counting inventory just once a month or irregularly is not enough – usage can fluctuate week to week, and a lot can go wrong in between counts. To keep food cost data accurate, experts recommend performing inventory audits at least weekly. 

For example, conducting weekly inventories (in addition to monthly) gives a timely, accurate picture of usage and lets you catch problems early. The ideal time is at the end of the week or period (e.g. after Sunday close) when stock is lowest, to improve accuracy. 

Consistency is key: counting the same day and time each week helps reveal anomalies (for instance, “we never ran out of shrimp on a Monday before – what happened this week?”).

Regular audits also mean counting everything – including prepped items and batch recipes, which many forget to inventory. If you don’t count prepped or in-process items (soups, sauces, butchered meats, etc.), the inventory “use” calculation will be off, artificially inflating your food cost (because those items appear as if they disappeared). 

In short, inaccurate or infrequent counts lead to unreliable food cost calculations and variances. By contrast, frequent and methodical inventory tracking is the backbone of good food cost control. Whether you run a small café or a multi-unit chain, make inventory counting a habit. 

Organize your storage for easy counting (group like items together, use a standard shelf-to-sheet order) and train multiple staff to share the task to reduce errors. 

With accurate weekly data on hand, you can quickly spot usage trends, theft, or waste issues and adjust purchasing before costs get out of hand. In sum, neglecting inventory counts is a top mistake that undermines all other cost tracking efforts – because what isn’t measured can’t be controlled.

Mistake 2: Using Incorrect Food Cost Calculations

Another widespread error is miscalculating food cost or using the wrong formula to track cost of goods sold (COGS). Many restaurant owners compute their food cost percentage incorrectly, which gives a false picture of profitability. A common mistake is using purchases divided by sales as the food cost formula. 

For example, some operators simply take whatever food they bought in a month and divide by that month’s sales. This is wrong – it ignores inventory on hand. One month you might purchase a lot of stock (building up inventory) while sales are low, leading to an inflated percentage if you use purchases/sales. 

The next month you might buy very little (using up existing stock) while sales are high, making the percentage look artificially low. Neither reflects reality because inventory changes aren’t accounted for. The proper food cost formula is:

∗∗FoodCost**Food Cost % = (Beginning Inventory + Purchases – Ending Inventory) ÷ Food Sales**∗∗FoodCost.

In other words, use the actual cost of goods used (through inventory depletion) over the period. This ensures you’re tracking the true cost of the food that left the shelves – whether sold, wasted, or stolen – against the sales generated. 

Restaurants that fail to include inventory changes in their calculations will see erratic, “garbage” numbers and can’t accurately pinpoint if their food cost is in line (typically around 28–35% of sales in a profitable restaurant).

Another calculation mistake is using the wrong sales figures. Food cost percentage should be calculated against gross food sales (before any discounts or comps), not net sales. If you comp a $10 meal for $5, the kitchen still provided $10 worth of product. 

Using net sales ($5) in the formula would wrongly double the food cost percentage, penalizing your chefs for something out of their control. Always use gross sales for an apples-to-apples comparison of cost to menu price. 

Lastly, ensure your inventory valuations are accurate – counting errors or missing values (e.g., not pricing out the inventory correctly) will yield a faulty cost percentage. The adage “garbage in, garbage out” holds true: bad inventory data = bad food cost data. 

Avoid this mistake by training staff on the correct COGS formula, using proper beginning and ending inventory counts, and calculating food cost % on a consistent schedule (many do it monthly, but weekly tracking allows faster adjustments). With accurate formulas and data in place, your food cost tracking will be far more reliable.

Mistake 3: Ignoring Food Waste and Spoilage

If your restaurant isn’t actively tracking its food waste, you’re likely throwing money away – literally – without realizing it. Food waste and spoilage are major contributors to high food costs, yet many operators don’t measure or analyze this aspect. 

Consider that U.S. restaurants generate an estimated 22 to 33 billion pounds of food waste each year. That represents tens of thousands of dollars per restaurant in tossed inventory annually. 

Shockingly, less than half of restaurants even bother tracking their food waste, which means the majority have no idea how much usable product (and profit) they’re discarding. 

Ignoring waste is a critical mistake in food cost tracking because it creates a blind spot: your inventory might be disappearing due to spoilage or overproduction, but if it’s not logged, you might assume it was sold. 

This can lead to over-ordering (replacing items that spoiled or were thrown out as if they had been sold), creating an endless cycle of waste and inflated costs.

Common examples include produce that goes bad in storage, prepared food that expires, trimmings and mistakes in the kitchen, or plates of uneaten food sent back by customers. Every instance of waste has a cost attached. 

If these losses aren’t tracked and addressed, your food cost percentage will be higher than it should be, and your profit will suffer. To fix this, implement a simple waste tracking system. 

This could be as basic as a clipboard “waste log” where staff write down any significant discarded food (burnt orders, spoiled ingredients, customer leftovers, etc.), or more advanced solutions like a waste-tracking feature in your POS or kitchen management software. 

By recording what’s being thrown out and why, you can identify patterns: maybe a certain ingredient is consistently over-ordered and spoiling, or a particular dish comes back half-eaten (indicating portion size or quality issues). 

With that insight, you can take action – order less of that ingredient, adjust recipes, improve prep techniques, or retrain staff on cooking to order. Also practice FIFO (First In, First Out) in storage so older stock is used before newer stock to minimize spoilage. 

Regularly inspect perishable inventory and move items that are near expiration. In short, waste should be treated as the costly expense it is. Track it, reduce it, and incorporate the data into your food cost calculations (remember, the COGS formula counts all products that “left the shelves,” including waste). 

By shining a light on food waste, restaurants can typically trim several percentage points off their food cost – a huge win for the bottom line.

Mistake 4: Lack of Portion Control and Standardized Recipes

Poor portion control is a stealthy food cost killer in many restaurants. When serving sizes and recipe portions aren’t standardized and enforced, you end up with inconsistency, waste, and higher costs. 

Over-portioning – giving more food than the recipe calls for – is essentially giving away product for free, eroding your margins. It also often leads to plate waste (diners leaving food uneaten), meaning you paid for ingredients that didn’t even get consumed. 

On the other hand, inconsistent portioning makes your food cost tracking chaotic: if one day a dish uses 8 oz of protein and the next day 10 oz, it’s hard to know the true cost per plate or why the margins fluctuate. 

Ignoring portion control is a common mistake, sometimes stemming from a well-intentioned desire to “give customers plenty” or from staff not being trained to measure servings. However, portion control isn’t about stinginess – it’s about consistency and profitability. 

Well-run chain restaurants are often cited for their consistency: the portion sizes are the same every time, which helps keep food cost predictable and under control.

Real-world examples illustrate how costly lax portioning can be. In one case, a restaurant discovered it was losing about $500 per week – roughly $26,000 a year – on French fries alone due to sloppy portioning and waste. 

Kitchen staff were dumping entire bags of fries into the fryer during slow periods “for convenience,” resulting in lots of cold, unsold fries thrown out each day. The fix was straightforward: pre-portion fries and cook them to order in smaller batches, plus enforce use of measuring cups for each order. 

Once the team weighed and measured portions correctly, the waste dropped dramatically, saving tens of thousands of dollars annually. The lesson is clear: adhere to recipe portion sizes for every ingredient in every dish. 

Use scales, measuring cups, portion scoops, and ladles to ensure consistency. Train the kitchen that portion control is non-negotiable – it directly affects the restaurant’s food cost and profitability. 

Standardized recipe cards should specify exact quantities, and any deviation should be corrected with coaching or tools. It’s also wise to periodically re-calibrate portions if you notice plate waste; for instance, if half of every pasta dish is coming back uneaten, you might reduce the portion size a bit (and save on cost) without hurting customer satisfaction. 

By eliminating portion size variability, you plug one of the biggest leaks in food cost tracking. Each menu item’s cost becomes predictable and accurate, making your overall food cost much easier to manage.

Mistake 5: Overstocking and Over-Ordering Inventory

Ordering more ingredients than you need “just in case” might seem like a safe move, but it’s a common mistake that drives up food costs. Overstocking inventory ties up cash, increases waste, and even encourages theft and overuse. 

Every dollar sitting on your shelves is a dollar not in your bank – and if that surplus food spoils or expires, it’s money down the drain. Restaurants often fall into the over-ordering trap due to lack of planning or data. 

Perhaps the person placing orders is going by gut instinct or last week’s sales, without accounting for upcoming changes (seasonality, holidays, local events, weather forecasts, etc.). Or they fail to adjust par levels based on actual usage trends, leading to excess. 

Another scenario is when managers order large quantities to get volume discounts, but then cannot use everything before it spoils. The end result of overstocking is always higher food cost: you either waste the extra product, or you might over-portion (since staff feel they have plenty on hand), or items get stolen more easily without notice.

The key to avoiding this mistake is data-driven ordering and maintaining optimal inventory levels. Industry best practice is to keep only about a week’s worth of inventory (5-7 days) on hand for most items. 

Any more than that, and you risk spoilage and tying up capital. Track your average usage and set par levels accordingly (many restaurants calculate pars based on usage per day * lead time + safety stock). Always check current stock before ordering more. 

Modern POS systems and inventory software can forecast needs based on sales patterns; for instance, if a big sunny weekend is coming, the system might project higher burger patty sales and suggest ordering extra (since each sunny day can boost sales ~11% in some cases). 

Conversely, if an ingredient has consistent waste, a data-driven approach would flag that you should order less. Over-ordering often goes hand-in-hand with not tracking waste (Mistake 3) – if you don’t realize you threw out 5 gallons of milk last week, you might buy the same amount again. 

To course-correct, implement an ordering process that uses real sales and inventory data rather than guesswork. Review inventory reports weekly to see if stock levels rose or fell. If you find you’re regularly tossing excess product, reduce your par. 

It’s also wise to consolidate orders and suppliers when possible – having deliveries too frequently or using too many vendors can lead to over-purchasing and complexity. Remember, inventory = cash. 

The leaner you can keep your inventory while still meeting demand, the lower your food cost will be. Avoid the trap of the overflowing stockroom; it almost always means waste and higher costs.

Mistake 6: Poor Supplier Management and Price Monitoring

Not managing your supplier relationships and ingredient pricing closely is another mistake that can inflate food costs. This includes issues like using too many different suppliers, not comparing prices or negotiating, and failing to monitor price changes on key ingredients. 

In the US, food commodity prices can be volatile – everything from dairy and eggs to meat and produce can swing in cost due to seasonality, inflation, or supply chain issues. If a restaurant isn’t keeping an eye on these shifts, they might be paying far more than necessary. 

One common error is sticking with the same vendor for years without checking if their prices remain competitive. Suppliers occasionally raise prices; if you never challenge or shop around, your cost of goods could creep up beyond the market rate. 

On the flip side, some operators try to use a long list of vendors to chase every low price, but ordering from too many suppliers can backfire. It complicates ordering and delivery schedules, increases administrative work, and can reduce your volume leverage (spreading purchases means losing bulk discounts). 

The goal should be to find reliable suppliers with good quality and negotiate fair pricing – and then monitor those prices.

Not tracking ingredient prices regularly is a major mistake. For example, if the price of cheese or chicken breast has gone up 10% over the last quarter and you haven’t updated your food cost calculations or menu pricing, you’re operating on outdated data and probably undercharging. 

According to restaurant procurement experts, you should track the prices of your regular products so you can spot increases and seek better deals. Make it a habit to review invoices or use software to flag when a vendor raises a price beyond a threshold. If that happens, you can renegotiate or look for alternate suppliers. 

Additionally, consider consolidating your vendor list to a manageable few who can meet your needs. This often yields better pricing (as you give them more volume) and simplifies tracking. However, always keep an eye on market rates – even with a prime vendor, do periodic cost comparisons. 

Another hidden aspect is contract terms: not paying attention to things like delivery fees, minimum order requirements, or payment terms can also increase your costs. Ensure you account for those in your cost tracking. Lastly, maintain good communication with suppliers. 

Poor communication (like unclear order specs or last-minute changes) can lead to mistakes, extra charges, or rush sourcing at higher prices. 

In summary, treat your purchasing like the strategic function it is: manage suppliers proactively, monitor prices and product quality, and avoid the mistake of taking vendor costs for granted. This will help keep your ingredient costs as low as possible without sacrificing quality.

Mistake 7: Inadequate Staff Training and Accountability

Even the best food cost tracking systems will fail if the people using them aren’t on board. A common mistake restaurants make is not training their staff in cost awareness and procedures. 

Food cost control isn’t solely the manager or owner’s job – everyone from the line cook to the dishwasher plays a role. If employees don’t understand why portion control, waste logs, accurate prep, and careful ordering matter, they may not follow the procedures that keep costs in line. 

For instance, a cook who isn’t trained on the importance of the recipe card might give an extra ladle of sauce “for flavor,” not realizing it blows the cost target. Or servers might offer freebies or oversize portions to please customers, unaware of the cost impact. 

Building a culture of cost consciousness is key. This means educating your team on the basics of food cost (perhaps share that the average restaurant only makes a few cents on the dollar in profit, so every slice of cheese or ounce of liquor counts). 

Explain the systems in place: how to take inventory properly, how to record waste or spills, how to follow recipes exactly, and how even small deviations can add up. 

For example, if each cook over-plates by just $2 worth of ingredients on each dish, and you serve 100 dishes a day, that’s $200 in daily lost revenue – which could be most of your profit.

Lack of accountability is related to training. If no one checks or reinforces the procedures, staff may become lax. Management should set the tone by enforcing standards consistently. Count inventory with a team (and have supervisors spot-check counts for honesty and accuracy). 

Monitor food prep occasionally to ensure recipes are followed. Use tools like portion scales and make them easily accessible. When mistakes are caught (such as a fridge left open and food spoiled, or a batch of soup burnt and wasted), treat them as learning opportunities and emphasize prevention. 

Moreover, assign clear responsibilities: who is responsible for ordering? Who signs off on deliveries and verifies the invoice? Who updates the recipe costs? Without defined roles, important tracking steps can fall through the cracks. 

Communication among the team is also vital – for example, kitchen staff should inform management if they notice an ingredient’s yield is off or if a lot of something is getting wasted, so adjustments can be made. 

In sum, failing to train and involve your staff in cost control is a serious mistake. When staff are trained and understand the “why” behind cost tracking procedures, they are much more likely to follow them. 

Creating accountability (through checklists, manager oversight, and a culture that cares about controlling cost) ensures your food cost tracking isn’t just a paper exercise but a day-to-day practice. Remember, consistency is key: the system works only if everyone consistently uses it.

Mistake 8: Improper Receiving and Storage Practices

Food cost tracking doesn’t end when you place an order – what happens at the back door and in your storeroom has a huge impact on your costs. Mistakes in receiving and storage can cause losses that throw off your tracking. 

For instance, if your team isn’t properly checking deliveries, you might be paying for items you never actually received (short shipments) or accepting sub-par products that spoil faster. An improper receiving procedure is a common weak point. 

Deliveries that are rushed or unchecked can slip by with mistakes like the wrong items, incorrect weights, or damaged goods. If no one is accountable for verifying orders against invoices, the restaurant could be losing money right at the point of delivery. 

Always have a trained employee receive orders – someone who knows to count and weigh the items, inspect quality (are the produce and meats at the right temperature and fresh?), and match everything to the purchase order. 

This person should not sign off until any discrepancies are noted and resolved (e.g., marking an invoice short and getting credit from the vendor). Failing to do this means your inventory records start off wrong (showing more stock than you actually have) and your food cost will appear higher when you inevitably run out early or have to re-buy product. 

Invest in basic receiving tools like a good scale, temperature probe, and invoice checklist to ensure accuracy. Additionally, schedule deliveries at convenient, expected times when your trained receiver is available – this avoids chaos that leads to missed steps.

Once goods are in-house, poor storage practices can quickly convert them into waste. A disorganized cooler or pantry can hide items until they expire. Not following FIFO (First In, First Out) rotation is a classic error – newer stock gets put in front and older stock gets forgotten in back until it spoils. 

Training your staff to always rotate stock (older product in front, use it first) is essential. Lack of labeling and dating is another mistake; if prep items or leftovers aren’t dated, you can’t track how old they are, leading to either accidental use of spoiled food or excessive discarding “just in case.” 

Always label and date everything in storage. Sanitation and temperature control are also critical: an unclean storage area or improper cooler temperature can ruin expensive ingredients. 

Make sure shelves are clean, food is stored in proper containers at safe temperatures, and areas are zoned (meats on lower shelves, produce away from raw meats, etc.) to prevent cross-contamination and premature spoilage. 

Finally, secure your storage. An unlocked storage room or chaotic system can facilitate pilferage (theft) or simply uncontrolled usage. By implementing a structured issuing system – where key or costly items are checked out or monitored – you can reduce unauthorized use. 

Many restaurants keep high-value items (like steaks or liquor) in a locked cage or only accessible by managers. Skipping this invites shrinkage. 

In summary, if you’re not paying attention to receiving and storage, you’re likely losing food cost dollars before the food even has a chance to reach the customer. Tighten up these practices to ensure that what you buy actually makes it to the kitchen in usable form. This will keep your inventory counts accurate and your food costs on target.

Mistake 9: Not Accounting for Theft and Pilferage

It’s an uncomfortable topic, but theft – whether outright stealing or small-scale pilferage – does happen in restaurants and can wreak havoc on food cost if left unchecked. Failing to account for or prevent theft is a significant mistake in cost tracking. 

Industry statistics show that as much as 75% of employees have admitted to stealing from an employer at least once. In restaurants, this might range from a staff member taking home a case of steaks or a box of produce, to nibbling away food over time (free meals, giving friends free drinks, etc.). 

If your inventory seems inexplicably off, theft could be one culprit. The mistake many operators make is assuming it won’t happen to them or not putting controls in place because they trust their “restaurant family.” 

Trust is great, but controls are better. Not having a system to track high-value inventory or leaving storerooms open is tempting fate. Theft directly increases food cost since you paid for items that were never sold. 

Moreover, if it’s untracked, it skews your food cost calculations – you’ll register higher “usage” (or unexplained variance) and might blame waste or pricing, not realizing shrinkage is occurring.

To avoid this pitfall, implement some basic anti-theft measures as part of your food cost tracking routine. First, maintain rigorous inventory counts (as noted in Mistake 1) – regular counts will expose patterns of missing stock quickly, which can then be investigated. 

Second, create checks and balances: for example, use a “buddy system” for inventory counts (one counts, another verifies) so that it’s harder for one person to fudge numbers or pocket items. 

Limit access to storage areas; ideally only managers or trusted key staff should have keys to the stock room, freezer, or alcohol storage. During operating hours, keep an eye on back doors and trash disposal – sadly, some theft involves hiding food in the trash to retrieve later. 

Also, watch the portioning of high-cost items (like meat cuts) – if cooks are unsupervised, extra portions might “accidentally” land on someone’s plate or get cooked as a staff meal without accounting. 

A formal issuing or requisition system for valuable inventory can help. For instance, require that the line cooks request steaks or liquor from a manager who logs it out, rather than having open access. 

This creates accountability and signals to staff that inventory is monitored. Additionally, review voids and comps at the POS – sometimes free food given to friends is hidden as voided orders. By tracking these, you can detect abuse. 

The goal isn’t to create an atmosphere of suspicion, but to have prudent oversight that removes easy opportunities. If theft does occur, address it promptly and appropriately to set an example. Ultimately, not recognizing theft as a potential drain is a mistake you can’t afford. 

By instituting some controls and audits, you’ll safeguard your inventory and ensure your food cost numbers reflect legitimate usage, not shrinkage.

Mistake 10: Failing to Leverage Technology for Food Cost Tracking

In today’s digital age, relying solely on pen-and-paper or gut instinct to manage food costs puts a restaurant at a serious disadvantage. Not using modern tools or software for tracking food cost is a mistake that can cause inefficiencies and missed opportunities for savings. 

Restaurants that embrace technology can automate and streamline many aspects of cost control – reducing human error and providing real-time insights that manual methods lack. 

For example, a good restaurant inventory management software can track stock levels in real-time, alert you when items are low, and even generate order suggestions based on sales data and par levels. 

It can also flag variances between theoretical usage (based on recipes and sales) and actual usage (from inventory counts), helping pinpoint issues like waste or theft quickly. Many modern Point-of-Sale (POS) systems integrate inventory and cost control features. 

A POS that tracks ingredient depletion and waste can produce a report before you reorder, so you know if an ingredient was used in sales or simply tossed out, allowing you to adjust orders accordingly. Such data-driven ordering cuts costs and prevents the waste cycle.

Beyond inventory software, there are specialized tools for recipe costing, menu engineering, and even food waste tracking (for instance, smart scales and waste apps that log what gets thrown away and why). 

Using these tools can uncover insights like which menu items have the highest food cost percentage or which days of the week your waste is spiking. Many restaurants in the US are adopting comprehensive restaurant management platforms – these combine accounting, inventory, purchasing, and sales analytics all in one. 

An example is Restaurant365 or other cloud-based systems that tie together your invoices, recipes, POS sales, and more, giving a holistic view of food cost and profitability. With such a system, you can see your daily food cost in dollars and percentage at a glance, track vendor price changes, and even automate inventory counting with barcode scanners. 

The mistake is thinking these tools are only for big chains or that they’re too expensive; today there are solutions for all sizes, and the ROI in saved food cost can be significant. 

Even a simple Excel spreadsheet template (if used diligently) is better than nothing, but many affordable apps can replace manual spreadsheets with more accuracy and less labor.

If you’re not leveraging technology, you’re also more likely to fall victim to the other mistakes we’ve outlined. Human error in counting (which can be ~5% error rate on average) can cost hundreds of dollars monthly, but a barcode scan or digital count ensures precision. 

Forgetting to enter a waste sheet or misplacing an invoice can throw off your numbers, whereas software can centralize this information. Of course, technology is not a magic bullet – it requires proper setup and staff training to use effectively. 

But in 2025 and beyond, successful restaurants are those that use data to drive decisions. Failing to use available tools means you might be missing trends (like that subtle weekly increase in chicken breast prices) or laboring for hours on tasks that could be automated, taking time away from analysis and action. 

If you haven’t already, explore restaurant cost control software or even built-in features of your POS. Many solutions can integrate with each other (for instance, your inventory system can pull sales data from your POS to auto-calc usage). 

The insight and efficiency gained by technology will help eliminate the manual errors and oversights that often lead to food cost overruns. In short, don’t let tech aversion be a reason your food costs spiral – even basic tools can dramatically improve tracking accuracy and save you money in the long run.

FAQs on Food Cost Tracking

Q: What is a good food cost percentage for a restaurant?

A: It varies by concept, but generally food cost should be in the range of about 28% to 35% of sales for a profitable restaurant. 

Fast food and quick-service places might run on the lower end (even mid-20s) because of lower ingredient costs and higher volume, whereas fine dining might tolerate closer to 35% due to higher-quality ingredients (as long as they offset with higher menu prices). 

Anything significantly above this range could indicate trouble, unless your business model accounts for it. It’s important to compare your food cost % to similar restaurants in your segment and watch trends over time. 

A temporary spike might be explainable (e.g. seasonal lobster prices), but a sustained high food cost signals you likely need to adjust pricing, reduce waste, or improve purchasing.

Q: How do I correctly calculate my restaurant’s food cost percentage?

A: To calculate food cost percentage accurately, use the standard COGS formula. First, add your beginning inventory value to all purchases (deliveries) made during the period. Then subtract the ending inventory value – the result is the cost of goods used. 

Finally, divide that number by your total food sales for the period, and multiply by 100 to get a percentage. In formula form:

∗FoodCost*Food Cost % = ((Beginning Inventory + Purchases – Ending Inventory) ÷ Food Sales) × 100*∗FoodCost.

For example, if you started the month with $10,000 of food, bought $20,000 more, and ended with $8,000 left on the shelf, your cost of goods sold is $22,000. If your food sales were $70,000, then $22,000 ÷ $70,000 = 0.314, or 31.4% food cost. 

Remember to use gross sales (before discounts) for this calculation to avoid distortion. And include all food-related purchases, but exclude other costs like labor. Calculating this weekly or monthly will help you track if your food cost is improving or worsening.

Q: How often should a restaurant do inventory counts?

A: At minimum, a full inventory count should be done monthly, but best practice is weekly for most restaurants. Doing it weekly allows you to catch issues early and correlate usage to sales on a more granular level. 

In fact, many experts recommend a weekly inventory (for example, every Sunday at close) to tightly control food cost. Weekly counts let you compare against weekly food purchases and sales, so you can spot if you used more product than expected (which could indicate waste or theft in that week). 

If weekly is not feasible, consider bi-weekly – but waiting a whole month gives problems four weeks to fester, which can be too late. Additionally, certain high-value items can be inventoried daily or a few times a week (for instance, meat or seafood stock, or even a quick liquor count at bar closing) as a mini-audit. 

The key is consistency: whatever schedule you choose, stick to it and count the same way each time for accuracy. Regular inventory counting is labor-intensive, but it’s one of the most powerful practices to control food cost.

Q: What tools or software can help track food costs effectively?

A: There are many tools available, ranging from built-in POS features to dedicated inventory management platforms. A few examples:

• Restaurant Inventory Management Software: These platforms (e.g. MarketMan, xtraCHEF by Toast, Restaurant365, Upserve, etc.) allow you to input your inventory, track deliveries, and decrement stock as you sell dishes.
  
  They often include recipe costing, so every menu item’s ingredient costs are mapped out. Such software can send alerts for low stock and generate variance reports comparing theoretical vs actual usage, which is hugely helpful.
  
  For instance, using a comprehensive inventory software lets you monitor stock levels in real-time, manage orders, and even compare supplier quotes for better pricing.
  
• POS Systems with Cost Tracking: Many modern POS systems (Toast, Square for Restaurants, Lightspeed, etc.) have modules or add-ons that track ingredient usage. Some integrate with inventory apps or have waste tracking features. A POS that tracks food waste or ties sales to inventory depletion can automatically produce reports to guide your ordering and identify excess waste.
  
• Food Waste Tracking Tech: Solutions like Leanpath provide smart scales and software that staff use to log all kitchen waste (trim waste, spoiled food, leftover batches). This gives detailed data on how much is wasted and why, so you can take targeted action to reduce it.
  
• Spreadsheet Templates and Accounting Software: Even using Excel or Google Sheets with formulas for the food cost formula, purchase logs, and sales can be a start for smaller operations.
  
  Additionally, accounting software like QuickBooks or Netsuite (with restaurant-specific configurations) can help integrate food cost data into your financial reports. The key is regularly inputting data (invoices, inventory counts) and reviewing the metrics.
  
• Mobile Apps and Scanning: There are apps that let you count inventory using a smartphone or barcode scanner, speeding up counts and reducing errors. These can tie into your inventory system to update counts instantly.

Ultimately, the right tool depends on your restaurant’s size and complexity, but even a small café can benefit from a basic inventory app to track key ingredients. The investment in technology usually pays for itself by highlighting cost savings and preventing losses. 

Many cloud-based systems are subscription-based, so you can choose one that fits your budget. By using technology, you ensure that your food cost tracking is accurate, up-to-date, and actionable, rather than scrambling through paper invoices and guesswork.

Conclusion

Controlling food cost is a never-ending challenge in the restaurant business, but avoiding these common tracking mistakes will put you on the path to healthier margins. 

Whether you run a quick-service burger joint, a cozy casual eatery, or a high-end fine dining restaurant, the principles remain the same: know your numbers, track everything, and respond quickly to problems. 

We’ve seen that mistakes like skipping inventory counts, using bad formulas, overlooking waste, sloppy portioning, and others can silently eat away at your profits. The encouraging news is that each mistake has a clear solution – often rooted in better process and oversight. 

By instituting weekly inventory audits, using the correct food cost calculations, keeping a diligent waste log, training your staff on portion control and cost awareness, and leveraging modern inventory and POS tools, you can gain control over your food cost.

Remember that in the US market, where food prices and operating costs have risen sharply in recent years, proactive food cost management is not optional – it’s essential for survival. The difference between a 30% food cost and a 35% food cost can be the difference between breaking even and going out of business in an industry with slim margins. 

And it’s not just about cutting costs harshly; it’s about running an efficient operation where you get the most value from each dollar of food you purchase. Small improvements, like reducing waste by a few percentage points or negotiating a better price on a high-volume item, can translate to thousands of dollars saved over a year. 

Equally, preventing mistakes means less stress and chaos – when your inventory is accurate and your costs are in line, you can price menu items confidently and invest in other areas of the business.

In conclusion, focus on building robust systems for tracking food cost: measure accurately, analyze the data, and involve your team. Use the available technologies and uphold best practices from inventory to storage to ordering. 

By avoiding these top mistakes, restaurants of any type – fast food, casual dining, fine dining, and everything in between – can maintain a sustainable food cost percentage and thrive even in challenging economic times. 

Effective food cost tracking is a cornerstone of restaurant success, and with diligence and the right strategies, you can keep your costs under control while delivering great food to your guests.