What’s a Good Food Cost Percentage for a Restaurant in Australia?

Most operators know the rule. Keep your food cost under control. But control it to what? Ask ten hospitality business owners in Australia what a “good” food cost percentage looks like and you’ll get ten different answers, some citing US figures, some quoting what their accountant told them, and a few still using the benchmark their head chef mentioned five years ago.

Getting this number right matters more than most people think. Set your target too high and you’ll never push to find that margin you are leaving on the table. Set it too low and you’ll cut your way to a product that no one wants to come for.

This guide breaks down the actual benchmarks by venue type for Australia and New Zealand, explains why they differ from US figures, and more importantly — explains why food cost percentage alone is only half the picture.

Why the “28–35% Rule” Is Too Broad to Be Useful

You’ll see “aim for 28–35% food cost” repeated across almost every hospitality guide on the internet. It’s not wrong but it’s too broad to actually help you manage your business.

A fine dining restaurant in Sydney with handmade pasta and premium protein on every plate has a completely different cost structure to a quick-service café selling flat whites and smashed avo. Benchmarking them against the same number is like comparing a formula one team’s fuel budget to your own.

The useful version of this benchmark is broken down by what kind of venue you actually run.

Food Cost Benchmarks by Venue Type — Australia and New Zealand

These are the ranges we see in practice across well-run venues in Australia and New Zealand:

Fine dining and nightclubs: 18–24%

A low food cost percentage in fine dining reflects high menu pricing and significant non-food revenue (beverages, cover charges, service fees). Nightclubs run low because their revenue is predominantly alcohol and alcohol spirit margins are typically very high. If you’re running a fine dining venue above 24%, there’s almost certainly a pricing, menu, or wastage issue worth investigating.

Pubs and casual restaurants: 25–30%

This is the broadest category and the one most multi-venue operators fall into. A pub doing $80,000 a week across kitchen and bar should be targeting 25–30% combined. If you’re consistently above 30%, the likely culprits are: supplier prices that haven’t been renegotiated recently, recipe costing that’s drifted out of date, or stocktake variance you haven’t tracked down yet.

Cafes and quick-service restaurants: 28–35%

Cafes and QSR run higher food cost percentages than most operators expect. The reason: lower average spend per customer, higher throughput, and tighter pricing pressure. The offset is lower labour as a percentage (fewer skill positions, more streamlined order from the counter). A cafe targeting 32% food cost with 22% labour is in excellent shape. The same cafe at 32% food and 30% labour has a prime cost problem.

Why Australia and NZ Benchmarks Are Higher Than US

If you’re reading hospitality guides from the United States, you’ll see food cost percentages quoted 2–3 percentage points lower than what you’d target in Australia or New Zealand. There’s a specific reason for this: tipping.

In the US, customers subsidise a significant portion of front-of-house wages through tips. This means the employer wage burden is substantially lower and operators can run tighter on food cost while still maintaining profitability. In Australia and New Zealand, full award wages apply to every front-of-house employee, and penalty rates on weekends and public holidays push effective labour costs significantly higher.

Benchmarking against US figures in an Australian or New Zealand operation will make your food cost look worse than it is, and potentially push you to cut in the wrong places. It is much more useful to use Australia and New Zealand benchmarks.

The Number That Actually Matters: Prime Cost

Here’s what most food cost conversations miss entirely: food cost percentage in isolation is only half the picture.

The number that tells you whether your business is actually profitable is prime cost — your food and beverage cost combined with your total labour cost, expressed as a percentage of revenue.

If you’re running a full-service restaurant at 28% food cost but 36% labour, your prime cost is 64%. That’s above the 60% target that well-run hospitality businesses aim for, and you’re likely struggling to make a profit regardless of how well your food cost is managed.

Conversely, a pub running 30% food cost with 25% labour has a prime cost of 55% — strong, with room still to improve, believe it or not.

This is why Loaded tracks both food cost and labour cost in the same platform — because looking at either one in isolation can lead you to solve the wrong problem. A venue that cuts food cost by 3% while labour quietly climbs 4% has moved backwards, even if the food cost report looks better.

Why Knowing Your Benchmark Isn’t the Same as Hitting It

This is where most operators get stuck. They know the benchmark. They’ve calculated their current percentage. The gap is obvious. But knowing a number and knowing how to move it are completely different things.

The gap between where your food cost is today and where it should be almost always traces back to one of three places:

Your buying. You’re paying more than you should for the items that make up the bulk of your cost — usually because you haven’t tendered your top selling items recently, or because no one’s checking whether you’re actually being charged the contracted price.

“In tendering our top 20 selling food ingredients, we were able to reduce our total cost of goods by 4%. I’d been told we could achieve this three years earlier, but I didn’t believe it — I thought with one restaurant we’d be too small to get better pricing. I was so wrong and really wish I’d done this a lot sooner.” — Cam Davies, The Fat Duck

Your managing. Recipe costs are out of date. Small price rises on key ingredients have compounded and your margins have eroded without anyone noticing. Ideally you want these changing in real time. Stocktake variance hasn’t been traced to a specific cause.

Your selling. Some of your highest-volume menu items are priced based on what the market expects rather than what they actually cost you — and you’re subsidising them with margin from elsewhere.

How to Use This Benchmark in Practice

The point of a benchmark isn’t to celebrate when you’re within range — it’s to tell you where to look when you’re not.

If your food cost is above the top of your venue type’s range, start here:

• Check when you last formally tendered your top 20 items by purchase value. If it’s been more than 18 months, start there.
• Check when you last updated your recipe costs. If it’s been more than 90 days and ingredient prices have moved, your recipe margins are almost certainly wrong. Ideally you want these changing in real time.
• Run a focused stocktake on your 10 highest-spend items. Stocktake variance is often where the gap is hiding.

If your food cost is within range but your prime cost is high, the problem is almost certainly labour rather than food.

If both are within range but margin is still thin, the issue is usually in your selling — pricing, menu mix, or discounting patterns that erode the margin you should be keeping.

Frequently Asked Questions

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

Most well-run cafes in Australia and New Zealand target food cost of 28–35% of revenue. Quick-service operations with high coffee volume can sometimes get this tighter — 25–30% — through standardised recipes and high throughput. The more important number is prime cost: food cost plus labour combined should sit below 60% of revenue.

Is 30% food cost good for a restaurant in Australia or New Zealand?

For a pub or casual restaurant in Australia and New Zealand, 30% sits at the high end of the target range (25–30%). It’s acceptable, but there’s almost certainly room to improve. For a fine dining venue, 30% is above target (18–24%) and worth investigating. For a cafe or QSR, 30% is squarely within the normal range.

What is a good food cost percentage for a bar or nightclub?

Bars and nightclubs with predominantly beverage revenue typically target 18–24% combined food and beverage cost. The low percentage reflects high-margin alcohol sales. If your bar is running above 25%, check your beverage pricing and pour consistency first.

What’s the difference between food cost and prime cost?

Food cost is your food and beverage spend as a percentage of revenue. Prime cost is food and beverage cost combined with labour cost. Well-run hospitality businesses target prime cost below 60% of revenue. Tracking food cost alone can give a misleading picture — if your food cost improves but labour climbs, you’ve made no progress.

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