The correct food cost for your restaurant can only be determined by you. But if you're sending something relatively light, it might be worth your while to calculate non-flat-rate postage. Once you understand how it works, try using your own recipes. Calculate the cost of transporting and handling the items on a monthly basis. You can adjust your goal food and labor costs within this percentage as long as you don't go over 60%. First enter the number of servings you typically need to provide. Price per serving is an indication of the cost of each portion of a type of food. Use the formula below to calculate usage: Beginning inventory is what you have before opening on the 1st of the month. how to choose the right restaurant management software, Restaurant Reopening post pandemic – Things to Consider. Knowing your business's actual cost percentage is necessary for this. If you find you're not hitting this target, adjust your portion sizes or ingredient costs. Getting the right amount of stuff at the right price reduces spoilage and optimizes food cost. Ideal food cost = $2,500 / 8,000 Ideal food cost = 0.31, or 31% As it … It is used most often when calculating the price of a single meal. Profit margins are thin in the restaurant industry. This is how I cost out a meal at home. Missing this step will skew your final numbers. That means it costs your restaurant an average 36% of a dish’s sale price to make it. The following guide will simplify these steps for you to ideally price the menu items. For example, include the price of the tomato slices used instead of adding up the price of a whole tomato. For our example, we'll assume you use $1,800 worth of inventory this month. Food cost percentage is just another term for food cost. If ingredients go up in price or if you notice a particular dish losing popularity, change your menu and upsell more popular and profitable dishes. Tracking inventory and the math above can be helpful in lowering food waste issues. It is a measure of cost of goods sold against sales and can help you determine if you're charging your customers the correct amount. Watch out for these common mistakes when using food cost to optimize your business: Hopefully, you now understand how to calculate your food costs and why it is important that you can master this skill. The following guide will simplify these steps for you to ideally price the menu items. Your Plate Cost and Beyond Ideal food cost is a calculation that does not factor in inventory losses, while actual cost is calculated using real inventory levels. With integrated apps that makes procurement and inventory management snap, you can tread the fine line between quantity and price that optimizes food cost and reduces waste. How To Calculate Food Cost and Price your Menu Items. Let’s plug some numbers in there to make it clearer. Do this for every ingredient in the dish and you've found the total food cost for the recipe. Also, steal any idea or recipe that can improve your dishes. Calculating pour cost is equally important, particularly if beverages are a large part of your business. Be it a squirt of ketchup, a slice of lemon or anything else. You'll also have to add in any inventory you ordered during the month (purchases). Click on “Compute CPS & Add to List,” and you’ll see your meat selection’s cost per serving, per pound, per meal, and the amount you should purchase. If a particular dish often comes back with a large amount of food left on the plate, adjust portion sizes accordingly. This is how much product your restaurant or bar has used over a certain period of time. To find the cooking cost for a single item just divide the monthly cooking cost with the total number of items served. 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