Are there industrial standards on food cost percentage?
I am doing mine now and wanted to compare costs.
Indy shops should be about 25-28%
Franchise shops 28-33%
do you figure your boxes into food cost?
I do not think you can pick a number and aim for it unless you have refined it to suit your market…
I agree with Royster, it really depends on your store and market. There is no industry standard for my store. IF the industry is considered a franchise delivery/carry-out, then it applies only to those franchises. The ‘general’ standard for restaurant business is 30% (food costs, not paper, not chemicals, etc…).
I find it useful to look at total COGS vs food costs only. My total annual COGS is usually about 20%. But that # is unique to my business and location. As Piper mentioned in another thread, rents and operating costs also vary depending on location.
From what I see in the restaurant business, food cost ‘percentages’ in a ‘mature’ business, usually reflect pricing ability. The more pricing ability, the less discounts you require to maintain sales levels. In extremely competitive markets, you will have very little pricing ability and normally will have a higher food cost relative to sales price.
It all depends on your area and other factors. There is no set number. Try to get under 25% food cost in my area and you would be out of business in no time. Factor in all your numbers…
Cheese price fluctuations alone can easily swing food cost by as much as 3-4 points. If your ideal cost based on average cheese prices was 30% a high price spike could take you to 32% and cheese getting below $1.40 could drop your costs to 28%.
We count everything we use in “food cost”. I should probably call it “cost of goods” just to be clear. That means boxes, napkins, condiments, supplies etc etc. I would like that number to be 29%. It has been as low as 27.5% (full year) and in the last couple of years has been more like 31%.
Many restaurants try to hit a goal of combined food and labor. I find that our best combination is 65%. Which usually works out to 35% food and 30% labor. If it drops lower than that for any length of time sales seem to suffer and so does the bottom line. If it goes higher than that, the bottom line also suffers and keeping the bills paid on time becomes a challenge. When food cost spike I’ll trim the payroll a little to counter balance until it retreats or until a price increase can be implemented. If you need to adjust your food cost, do it gradually. Small price increases and or small portion decreases. Don’t make any major changes or you’ll scare people away.
We are delco units and our food cost include all food and supplies including cleaning and office type stuff.
Our payroll % includes all managers,taxes and workers comp expenses. Everyone but myself.
David
Pizza Pirates
pizzapirates.net
is that with all taxes and prep? My in-store (Drivers-Managers-Cooks) % goals are 20% but with taxes and prep we are 27%-30%
Food is 28%-35% depending on cheese and we count virtually everything in that. If I could sell more at regular prices I would 3% less. But alas competing with Big 3 and the coupon game.
Funny thing is where I advertise my cheapest offers at my campus store I run the lower food than in my residential stores but they sell more package deals which have higher food % but a bigger gross margin per offer sold.
Yes the 30% includes all payroll related expenses.
Managers
Drivers
Insiders
Prep
Payroll Taxes
Workers Comp
We do run a little higher in the summer when school orders drop out( 32% ) but the food usually drop 2% to balance that out
Thanks everyone
I am just going to work out my actual food cost, then operation cost.
Will post my figures soon.