Cost of Goods

I’m redoing my menu and pricing. We haven’t increased prices for about 14 months and with cheese and flour costs, we have no choice. We sell pizza by the slice.

I’ve determined that my COG for a slice of cheese pizza is .78, does that sound about right using 18" pie size?
Sauce - 4.0 oz, Cheese 2.25 oz.

How do I figure how much to increase on a cheese slice? Our current price (based on 18" pie, with 8 slices) is $1.45?

How many slices are you cutting it into? What quality level are you shooting for?

We use an 18" pie, then cut into 8 slices. We specialize in NY style. Quality is very important, I don’t want to change the quality of our product at all.

From the above I calculate this way:
$.78 (COG) / $1.45 (Current Price) X 100 = 53% (Food Costs)

To get a Selling Price at a specific Food Cost the calculation would look like this:
$.78 (COG) / 30% (Food Cost) = $2.60 (Selling Price)

I’ve determined that my COG for a slice of cheese pizza is .78, does that sound about right using 18" pie size?
Sauce - 4.0 oz, Cheese 2.25 oz.

Your sauce calculation doesn’t look right… 4 oz. X 8 would be 32 oz. per pizza. That’s a lot of sauce!:shock:

I know food cost % is important, but I think there are two more important factors:

1) How much are they (customers) willing to pay for your slices? At $1.45 per slice, an increase to just $1.99 is a 37% increase in price. Are your customers willing to pay that much for a slice? If so and your volume doesn’t suffer, then it’s a good thing. At $1.99 per slice, your food cost is reduced from 54% to 39%.

2) How much profit do you need to make? Cheese and flour prices have been high for over a year now, so maybe you don’t need to raise prices that much. Let’s say you want to make $100 gross profit per day. At your current price of $1.45, it’ll take 128 slices or over 16 pizzas. If you raise your price to $1.99, it’ll just take you 83 slices or 10.3 pizzas to make the same $100 profit. If you sell the same 128 slices after the price increase, you’ll pocket an extra $54.88 or over a 50% increase in profit!

Food for thought…

pizzafanatic, 4 X 8 = 16?

Your stated portions of 4 oz sauce and 2.25 of cheese are VERY high. On an 18" pizza I would expect to use maybe 10 oz of sauce and 12-13 oz cheese which would come to a little over 1 oz of sauce and 1.5 oz of cheese per slice. We make 16" rather than 18" but I figure that my cost per slice would be under 40 cents on an 18" pizza cut into 8. Are you sure that your cost of 78 cents is right?

I sell slices in pretty high volume. (average of about 300-400 per day and a peak on big days of about 900-1000) In my opinion, food cost on slices should be closer to 20% than 25%.

On the assumption that your cost calculation is mistaken and cost per slice is about 40 cents, I would raise prices to $2.00 and hit that 20% goal. It is very important that your menu cost comes in a few points below your target food cost. By the time you add back paper, condiments, supplies, waste etc you will end up in the mid 20s if you start at 20%.

For a better way to figure food cost, use an entire batch of dough to figure dough cost and divide by the number of doughballs, same goes for sauce. My guess would be that you use something like 8-10 ounces of sauce on an 18" pie. Just take the number of ounces of liquid used in the recipe and divide by your ladel size to get a portion count for cost. Weigh a portion of cheese and figure the cost… add it all together for whole pie and divide by 8 slices

whoops, my bad… late night math; not a good thing.

32 oz. of sauce seems like it would be a bit messy :?

I sell slices and my food cost is about 22-28%. I do 14" pizzas cut into sixes. Obviously this percentage will go up if I have to throw out the leftovers, which is why I opted to go with smaller pizzas with fewer slices.