I’ve been open for 7 weeks now. Between word of mouth, an eddm campaign and social advertising I’m doing pretty well now. Last week we grossed 9k and this week (ends tomorrow) looks like I’ll end up doing around 11k.
My question is how to figure cogs percentage? I’ve read on this site that you need to go through every item to figure out what you used for the week. That seems like a lot of work to do every week. Can’t I just take the weeks bills and total them?? Example: If my gross was 11k this week and I spent $4500 on cogs that equals 41%??
The just counting the bills thing works for me. It gives you a vague idea of how you are doing - which is really all you need. It gets more accurate the longer the time covered, of course. Most people get too hung up on exact numbers and spend way too much time attempting to get them, time they should spend running their actual business.
I do a quick and dirty inventory every time I place an order for supplies. In general I only order once a week and I have to know what needs to be ordered which means doing an inventory. Take cheese for example if I started with 1 case bought 6 cases and ended with 2 cases. From that you can derive my cost of cheese for the week.
I am of the opinion you need to know your COGS on a weekly basis but not necessarily a detailed report unless something is out of the normal operating range.
If you don’t know your costs on every item, you don’t know how much money you are making, pure and simple. That includes sauce tomatoes, sauce seasoning. lemons for iced tea, straws, everything…of course, that means hamburger, pepperoni, Spam, and all your other pizza toppings.
An inventory every week is crucial to helping control costs, as long as you actually use it. If you choose to not do it, you could be close but possibly not. Totalling the paid outs is fine, but you won’t have an idea of what specific items are really costly—need to watch them closely, maybe cut them out or reduce quantity–and which are cheaper for you, so you can add a little more and make a customer happy.
Take inventory every week. Don’t bother counting red pepper packets and parm or salt and pepper etc. When you have the list of items to count down to a reasonable level, counting and entering the info is a 20-30 minute project and well worth doing.
(Starting inventory value + goods delivered - ending inventory) / net sales = cost of goods sold.
Counting is easy: 6 cases of pepperoni is 150 pounds (for us with 25 pound cases) plus a half of a 1/3 pan on the line equals 3 lbs… next? (We do not weigh the pans on the line… just estimate. ) In the context of a week’s business that is close enough.
Counting the bills does not work for a short period like a week. The difference between a Monday delivery and a Friday delivery would throw your numbers out the window. Even a single day could be a 10 point swing. Useless.
Menu cost is not cost of goods sold. Menu cost is ideal cost but does not take into account waste, theft, mistakes, portion control, selling discount or price changes in the goods you buy. When setting menu prices you should be looking at both the market for realistic selling prices and food costs. Your actual COGS will be quite a bit higher than your ideal or “menu cost”. Calculating the actual detailed cost of the things you sell is useful but should not be your main focus in cost control.
I don’t count what is already prepped for sale, stored in the make table or other cooler. I consider that gone, since it likely will be by the end of the day. It doesn’t make a difference, as long as it’s done consistently; one person does the count including everything in the prep tables and coolers, one only counting the stuff in the walk-in etc…that leads to fluctuations which aren’t real.