The importance of food cost control in your business is critical.
Basically, the term Food Cost is the total cost of the various ingredients in the menus compared to the total food sales over a certain period (for example, one month). It is important to emphasize that although the term is based on the word food, the treatment and behavior with beverages is the same and in most cases the term Beverage Cost is encountered.
Correct pricing of the cost of food is an extremely important factor since it has a direct impact on the profitability of a restaurant. The food cost is the cost of your ingredients and does not include other costs. Correct food pricing is an essential tool in determining whether food cost goals are met, and they are an integral part of your business.
In many cases we can see a business as if it were working and be impressed by the customer traffic in it, but as in the well-known proverb, “one should not look at the jar but at what is in it”. There can be a positive sales cycle but sometimes it is simply not enough because when we reach the end of the month, we notice that the profits are minor and sometimes do not even exist. The solution to this is knowing the numbers and mastery them.
As a rule of thumb, the food cost of a restaurant will be about 30% on average, fast food business F.C will be about 25% and the F.C of a bar whose main product is alcohol will be about 15%.
There are several major problems that can affect us on the cost of food:
1. Purchase price from suppliers – frequent market price fluctuations causing changes and lack of control over numbers.
2. Selling price – too low compared to the cost of the food
3. Suppliers – small/special suppliers whose delivery notes or invoices are not clear when it comes to detailing the prices of the various products.
4. Non-registration – non-registration of consumed products. Goods transfers between different businesses, customer invitations (oth), inventory counts and more.
5. Changes – frequent changes in the product being sold. For example, menu changes.
6. Awareness – the team’s awareness of the existing raw materials, the way of working, processing and storing them.
7. Waste – the percentage of waste is too high. For example, slow turnover of raw materials, instability, and control of their processing.
To calculate the cost of food correctly, we will use organized tables (xsl) or digital platforms such as inventory software where you can perform the calculation according to the interface of the specific platform.
There are many ways to calculate food costs.
Here we will tell you about our way of doing this
In the tables we refer to several factors:
Product – refers to all those raw materials or the various products with which we work and process in a certain dish.
Weight – when we work according to a recipe, usually we work according to the net weight.
In practice, when we talk about pricing, we are interested in knowing the gross weight of that product. Therefore, the gross weight must be calculated by a formula that adds the waste percentage to the net weight.
Unit of weight – Unit of weight refers to the product itself and enables quantification of weight.
We will translate the price of 95% of the products into a kg or a liter.
Only in a few cases will we use another term, which is units. An example of such a case is a burger bun.
Waste – Waste is the difference between the net weight and the gross weight that we usually lose during work.
Purchase price – The purchase price is the price that the supplier charges us for a particular product.
So, after we have calculated the food costs, comes the critical part of the process and that is maintaining consistency and inventory.
Inventory – Storage control is an integral part of the food cost in your business!
Without this control we can never know the exact food cost.
We can control the Storage by inventory counts which are usually done once a month. The monthly stock count serves us both as opening and closing stock.
In conclusion, one key formula must be remembered:
Opening inventory + expenses – Closing inventory = Food Cost%
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