Hello to all, especially those who have built their business from zero. I appreciate all your helpful insights and willingness to share here. I would like to think that I will in turn be helpful at some point.
I am looking at our food costs and breaking it down further into categories to keep track of potential problem areas. Cheese costs for example as a percentage of revenue. Anyone here have a running average or target? I saw that ours was pushing it into the 17% (of revenue) range over this last week and it was a bit unsettling. We have not altered prices in about 4 years. Here are the categories we track, maybe you group yours differently anyways it would be great to hear back from everyone.
Dairy / Eggs %
Can Goods %
Dry Goods %
Total Food Cost %
Hello mozza! Knowing your food costs is a huge part of pricing your menu. I have operated a pizzeria for 8 years and use my food cost as a pricing guide for my entire menu. I don’t see a reason to look at food costs in catagories.
Instead, you should know:
The food costs for each menu item.
Using a spreadsheet that will allow you to map each recipe and ingredient. It will allow you to account for fluctuations in price for that ingredient and the yield percentage (how much is wasted). I have a spreadsheet that lists every ingredient I purchase. It lists a recipe for every item on my menu. When the ingredient price changes, I can instantly see how it affects my food costs.
They call this: “menu mapping”.
Once you complete a menu map, you should also create a break even analysis. The purpose of a break even analysis is to see what sales you need to achieve the profit you desire. Both of these spreadsheets are available online.
This line right here unsettles me abit. I am constantly reviewing my pricing structure, at the very least every 6 months if not sooner. I keep track of my big items and when they fluctuate to far from the norm, i attempt to evaluate if they are going to continue going up or if it is just a short term spike.
I actually stayed ahead of the whole cheese disaster this past year because of that.
We run 12% to 15% cheese cost. Right now its 12% because of the lower cheese prices. We don’t track this number on any regular basis or have it in any system process. I just pull up the calculator and check it from time to time. I would say 17% is a bit on the high side. If you polled everyone and averaged it out I would estimate it to be closer to 10%
Best guess on cheese for us is about 12.5% but we do not track it separately. Over the longer term recently we have been running about 31% overall COGS but the way we do it, that includes paper and supplies. Working to get that number back to 29%. For the last couple of months we have hit 29%, but that is harder for us to do when we slow down a month from now.
Hello all! Thank you for the wise answers here, really appreciate the fact that most of you learned this from experience and risking your own skin.
Follow up questions.
We have 3 pizza sizes 8" 12" and 18" I have implemented “menu mapping” (thank you Pizza of the Month) it spits out the price based on the % I would like to target and then it also spits out a price based on toppings if it was created as a custom pizza. I then can choose how to price with that information. I am inclined to target a lower food cost for the smaller sizes for example 8" =26% and 12"=28% and our XL at 30% that is for an overall menu pizza. Still the Supreme or Meat lover gets closer to 35+%. Menu pricing is really an art and I realize we are all trying to get close to an overall -30% but that is through drinks and other items like cheesy sticks etc.
Does this make sense to have tiered targets?
Also I am really curious what percentage targets you all have for additional toppings? Considering having two tiers for toppings, regular and premium.
The way I have always done things is to figure my labor costs first, then decide where I can run my food cost to stay under a combined food/labor cost of 55% (50% combined or under is even better)
So, there are a few things on our menu that are priced on the low side due to the super low labor cost ratio on those particular items , and we sell the heck out of them too. I see those items as our “Hook” items.
I have items near a 15% food cost, and I have other items havering in that “Not for profit zone” of 40% food cost due to labor for them being so low.
Whats been killing us the cost of beef this year, I think our beef tonnage since January has already exceeded 17 tons to date.