Food Cost

Need help here guys…how do you figure your food costs. I have always used the previous weeks sales to current weeks purchase. Also when I figure my costs I exclude beer and wine since it always fluctuates and the inventory sits longer. I operate a full service restaurant and strive for 25%. Can you guys give me some insight here. Also…My payroll is skyrocketing…I pay extra for premium help, and I would hate to cut some people just in case we get slammed. But recently sales are in the toilet and it is my first summer opened in my area. I’m stuck between a rock and a hard place. What would you do in desperate times.

first thing is make sure you have a good accounting software and a good foodcost program. We use a program called cheftec. It is a little costly but can preform everything to quoting large catering orders, foodcost even creating training manuals with instructions and ingredients for you kitchen staff. Lastly, you have got to be around to learn trends and patterns of your restaurant so you have an educated guess on how to cut staff accordingly. The is no 100% effective formula, just past info.

Accounting 101…

Beginning Inventory

  • Purchases
  • Ending Inventory
    = Cost of Goods Sold

divide CoG by Net Sales to get accurate Food Cost…

notice you must do a physical inventory to get accurate costs…

you can do this for both food and beverage costs

you can use guidelines like dividing monthly purchases by net sales, to give you an idea, but it is only an idea…

Semper Fi
U.S.M.C. Auditor

That’s how we do it. We get an “ideal” COGS per item by using invoices and per unit costs along with our recipes. We get the actual food costs using the above inventory formulas.

We do it the same way. We take an inventory every Monday morning.

Last week inventory

  • purchases
  • ending inventory

We do not count stuff like cleaning supplies, condiments and napkins, so those items get expensed the week we buy them as they are part of the “purchases” number we are adding in to the equation.

When food cost starts to climb, I make the closing manager do cheese inventory and calculate cheese cost every day. This brings their focus where I want it to be. After a month or so I can go back to weekly.

I’ll reiterate:

Food $ / Net Sales as a percent.


Food $ = $300
Net Sales = $1,000

$300 / $1000 = 30%