How is food cost percentage calculated?

The calculation of food cost percentage is essential for evaluating the efficiency and profitability of a restaurant's operations. It is determined by taking the total food costs incurred during a specific period and dividing them by the total food sales for the same period. This calculation allows management to see how much of every sales dollar is consumed by the cost of food, providing insight into pricing strategies, menu planning, and overall financial health.

This approach helps establishments monitor their food costs relative to their revenues, which is crucial for maintaining profitability. A higher food cost percentage may indicate issues such as pricing problems, excessive waste, or inefficiencies in the supply chain, prompting management to take corrective actions. Maintaining an optimal food cost percentage is a key factor for any restaurant's success, as it directly influences profit margins.

The other methods mentioned in the options do not directly relate to calculating food cost percentage. For instance, subtracting expenses from total sales does not provide information on food costs specifically, while adding up menu prices merely reflects potential revenue rather than actual costs incurred. Lastly, measuring inventory levels is important for understanding stock management but does not equate to a percentage that highlights the relationship between costs and sales.