How to track food costs and profit in a small restaurant
By Heisnam Pravin Singh · Updated 29 October 2026 · 7 min read
A busy restaurant can still lose money. The only way to know is to track three things: what each dish costs you to make, what you sold, and what you spent to run the place. Here's a simple way to do it without an accountant.
1. Work out the cost of each dish
List the ingredients in one portion and what each costs you. Use the price you pay per kilogram, litre or piece, and the amount in one portion.
| Example: one chicken chilli | Amount | Your price | Cost |
|---|---|---|---|
| Chicken | 0.2 kg | ₹240 / kg | ₹48 |
| Oil | 0.03 L | ₹180 / L | ₹5.40 |
| Onion, capsicum, sauces | one portion | about | ₹12 |
| Total | ₹65.40 |
The numbers here are only an example; use your own prices. Update them when your supplier's prices change.
2. Food cost percentage
Food cost % = cost of the dish ÷ selling price (before tax) × 100. If the chicken chilli above sells for ₹220, its food cost is 65.40 ÷ 220 × 100 ≈ 30%.
There's no single right number. It depends on your cuisine and prices, but tracking it shows which dishes earn well and which barely cover their ingredients. A dish with a very high food cost % is a candidate for a price change, a smaller portion or a cheaper ingredient.
3. Gross profit and net profit
- Sales (before tax): what guests paid you, minus the GST you collected for the government.
- Cost of goods: the ingredient cost of everything you sold.
- Gross profit = sales − cost of goods. What's left to run the business.
- Expenses: rent, salaries, electricity, gas, repairs, marketing, fees.
- Net profit = gross profit − expenses. What you actually made.
Look at these daily, weekly and monthly. A single good day says little; a month tells you whether the business works. Rent is usually paid once a month, so a day can look like a loss even when the month is fine.
4. Track stock, not just sales
Ingredient cost on paper only matches reality if stock doesn't disappear. Once a week, count what's in the store room and compare it with what you expected after the week's sales and deliveries. A consistent gap points to waste, spoilage, wrong portions or theft, all of which raise your real food cost.
- Record deliveries as they arrive.
- Record waste (spilled, burnt, expired) separately, so it doesn't hide in the gap.
- Set a “running low” level for each key ingredient, so you reorder before you run out mid-service.
5. Record every expense
Note each expense with its date and category the day you pay it. A shoebox of receipts at the end of the month is how net profit becomes a guess.
A simple routine
- Daily: check the day's sales and record any expenses and deliveries.
- Weekly: count your stock, compare it with what you expected, and review your best and worst sellers.
- Monthly: look at gross and net profit and margin, and adjust prices or portions where needed.
Doing this in Takane Serve
In Takane Serve you add your raw materials and a recipe for each dish. Every order takes its ingredients out of stock, dishes sell out automatically when an ingredient runs short, and a stock check shows the gap between counted and expected stock. The Reports page shows sales, cost of goods, gross and net profit and margins, and expenses by category, daily, weekly or monthly, with a CSV download for your accountant. Try it free.