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 operators what a good food cost percentage looks like and you'll get ten different numbers — many of them benchmarked against the wrong market entirely.

This guide covers the right targets for Australian and New Zealand venues, why the benchmarks differ from US figures, and what food cost percentage actually tells you about the health of your business.

What is food cost percentage and how do I calculate it?

Food cost percentage is the ratio of what it costs you to make food compared to the revenue that food generates:

Food Cost % = (Cost of Food ÷ Food Sales Revenue) × 100

A venue spending $30,000 on food to generate $100,000 in food sales has a food cost of 30%.

For daily and weekly tracking, the more useful version is the actual food cost formula, which accounts for stock movements: (Opening Stock + Purchases − Closing Stock) ÷ Food Sales × 100.

For the full formula breakdown with worked examples: Food Cost Formula: How to Calculate and Manage It.

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

It depends on your venue type. Here are the benchmarks for Australian and New Zealand hospitality:

Fine dining and nightclubs: 18–24%
Fine dining runs lower food cost because high-margin beverage sales — wine, cocktails, spirits — offset the kitchen cost. Nightclubs are predominantly alcohol and entry revenue; food is incidental. A fine dining venue consistently above 24% has a pricing or wastage issue worth investigating.

Pubs and casual restaurants: 25–30%
This is the most common format for multi-venue groups in Australia and New Zealand. A pub running $80,000 per week should be targeting 25–30% combined food and beverage. Above 30% consistently, and the likely causes are supplier prices that haven't been renegotiated, recipe costing that's drifted out of date, or untracked stocktake variance.

Cafés and quick-service restaurants: 28–35%
Cafes and QSR run higher food cost than most operators expect. The reason is structural: lower average spend per customer, higher throughput, and tighter menu pricing. The offset is lower labour as a percentage. A cafe at 32% food cost with 22% labour is in strong shape. The same cafe at 32% food and 30% labour has a prime cost problem.

Why do Australian and New Zealand food cost benchmarks run higher than US figures?

If you're reading US hospitality guides, you'll see food cost targets quoted 2–3 percentage points lower than what's realistic in Australia or New Zealand. The reason is tipping.

In the United States, tipping effectively subsidises a significant portion of front-of-house wages. Operators in the US can run tighter on food cost and still maintain overall profitability because labour cost as a percentage of revenue is structurally lower.

In Australia and New Zealand, full award wages apply to all staff, with weekend and public holiday penalty rates on top. There is no tip subsidy. The result is that labour cost runs higher as a percentage of revenue, which means food cost targets need to be set with that context in mind.

Benchmarking an Australian venue against US food cost targets will make your numbers look consistently worse than they are — and may lead you to cut in the wrong places.

What is prime cost and why does it matter more than food cost alone?

Prime cost is food and beverage cost combined with total labour cost, expressed as a percentage of revenue. It's the number that determines whether your venue is profitable.

A restaurant running 28% food cost and 36% labour has a prime cost of 64% — above the 60–65% target for a well-run full-service venue. A pub running 30% food cost and 24% labour has a prime cost of 54% — strong, with room for investment.

Tracking food cost in isolation without watching labour means you can hit your food cost target while still running an unprofitable operation. The two numbers move together and need to be managed together.

How often should I be checking my food cost percentage?

Daily and weekly. A monthly food cost figure tells you what happened four weeks ago. By the time you've seen it, you've already run another month at the same rate.

A daily and weekly food cost figure, reviewed every Monday alongside your reorder decisions, gives you multiple intervention points per month instead of one. Most of the variance that shows up in a bad monthly P&L was visible in the weekly data three weeks earlier — it just wasn't being looked at.

What causes food cost to run above benchmark?

The five most common causes: wastage concentrated in high-purchase-value items; supplier invoice prices running above contracted rates without anyone checking; recipe costs that have increased as ingredient prices moved without the recipe cards being updated; discounts and comps that reduce sell price without being tracked at the margin level; and no mechanism to flag when sell prices need to increase as underlying costs rise.

Each of these is a systemic gap rather than a kitchen discipline problem. Fixing them requires visibility on the gap between ideal food cost and actual food cost, tracked daily and weekly. For the full breakdown: How to Reduce Food Cost in Your Restaurant Without Cutting Portions.

Related guides

• Food Cost Formula: How to Calculate and Manage It — the three formulas every operator needs, from simple recipe costing to actual period food cost, with worked examples and Australian benchmarks.
• Recipe Costing for Hospitality: How to Price Your Menu for Profit — how to cost recipes accurately and keep them current as prices change.
• How to Reduce Food Cost in Your Restaurant Without Cutting Portions — five levers that move your food cost without touching portion sizes.
• Why Gross Profit Matters More Than Revenue in Your Restaurant or Bar — why a busy service can still be a bad week.
• How to Price Your Restaurant Menu for Better Margins — cost-plus vs value pricing, menu engineering, and the power of differentiation.