What would be an ideal food Percentage. Also a wage percentage to run a successful pizzeria.
If I was opening from scratch what would you set the figure to be in a a budget in the business plan.
Does anyone have a template or similar to set out calculations to set out the food costs on pizza.
ie this is what it cost and with my coupon this is what the cost less my food costs etc.
Any tips in this area.
Food cost is figured as cost to produce the good divided by the price received for the good. If a pizza casts $3 to build (include boxes, wraps, bags and anything disposable it takes to get this pie out the door). . . and sells for $12 . . . then Food Cost percentage = 25%.
I aim as low as possible and hit around 30% to 32% most months. We are getting better with better portioning. I think that is the general range many folks here have reported. some are glowing hot and in the high 20’s.
For opening, assuming you will do reasonable volume (Impossible to comment on without knowing location, marketing plan, build out etc etc) 30% each for food and labor is a good place to start for a start-up proforma. For labor that counts everything, wages, taxes, unemployment but does not include work comp which is another 1% of sales or therabouts. It also assumes that whoever is running the place day to day (you?) gets paid a market wage for the job. For food, that 30% should cover all conumables including paper and cleaning supplies.
In higher volume stores or where wages are low, you can get that labor down into the low 20s. I run 22-23% when sales are over 15-20 per week. Food also drops down to the 27-28% range then. When sales are low, those percentages will rise.
My approach on all this is a bit different.
I think rather than having starting points like good food % is 32 and good labor is 25% (which they would be) I think you have to do the system backwards.
Someone can run 32% food and 25% labor all day and still not make a dime…Why?
You have 100% to work with. (Your sales)
You have to figure out your fixed costs FIRST. If your fixed costs are over 45% you can run the above numbers and never get anywhere.
So what is your fixed cost?
Whatever is left over is all you have to divide between food, labor and profit.
I think many times posters want a magic number but it will be different for everyone. That is why it is so hard to get a clear answer when people ask this question.
For us our ideal food cost is 32%
Our ideal labor is 25%
First you have to decide what business you are in, who your customers are and why they will buy your product. Then you have to decide what product you are going to sell…and just exactly what this product will cost you to produce. Then you have decide what kind of price you will need to charge to cover all of your fixed costs. Then you have to figure if your market will be willing to pay this price. I think this is what any manufacturer would do before they decided it would be profitable to open in a given area.
Steve, as you know here in Perth rents and wages are sky high compared to what the guys in the US write about.
To give you an idea I pay $4,253 a month for 120 sq mt plus gas and electricity. All up around $5,700 per month = 14%. We are in a medium size shopping centre (Woolworths and 30 shops, plus a Cinema complex) but I looked at an ex Eagles Boys in Malaga (across from the weekend markets) and rent was similar for a same size store with poor shop frontage and exposure.
My wages bill is about $2,200 per week including the 9% superannuation where applicable. Cost to gross sales = 22%
Food costs is around 30%
Other costs - insurances, workers compensation, licences, maintainance etc come our around another 12 - 17%.
Net earnings before tax is about 17 - 20%. Not a lot of fat for the outlay and hours.
As far as coupons / giveaways etc, we cost these as a sale and claim as Promotion and Advertising come taxation time.
I know people are going to kill me on this but I have been taking both with a grain of salt lately and its been working great for me.
the first thing was we tailored some specials to get the bottom line up…
adding chicken wings and specials raised the bottom line but also food cost…
as far as labor I constantly was fighting keeping at a certain percent usually had a goal of 20-25 percent.
we found we had a good amount of turn over, so we gave raises and our labor percent is up to about 30 percent BUT we have found that paying our best employees a better salary we retain them and they feel better about working here and they tend to weed out the ones that do not!
and most important retenion has been GREAT
Specials to me seem to be more about top line performance . . . getting more dollars in the door. Once I increase the top line gross revenues, then I manage the line item expenses to improve efficiency and amount of that new revenue that I carry to the bottom line (net profits).