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Costing basics 3 min read
Food cost percentage vs gross margin
Same data, two lenses. Use whichever your team thinks in naturally.
Food cost % and gross margin % describe the same relationship from opposite sides.
Food cost % = cost divided by price. A lower number means more profit.
Gross margin % = (price minus cost) divided by price. A higher number means more profit.
If food cost is 30%, gross margin is 70%. They always add to 100%.
Restaurants traditionally speak in food cost. Retail and CPG businesses speak in margin. Use whichever your team already thinks in.
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