For past year or so I been helping out running a resturant with delivery for my folks in tristate. I figured our food costs were a bit high with everything been going on.
So i wanted to have a general idea what my food cost was for past 2 months. So I simply divided my net sales by my total food /beverages puchases for sept and oct I came out with 42% for sept and 38% for oct. I was shocked is the way to high?
What should be a general range for food costs? I figured it was around 25-30%.
I’m pretty sure my prices are correct for our menu. Only thing i can think of if it is really high is waste or portions are way off. We dont reallydo not have a portion control system in place not even sure were to start if that is the problem? Any imput be greatly appreciated
When I first opened in early 2007, I was running about 29% FC. But since then, nearly every commodity has increased, particularly cheese and flour. I’m now running about 35%. I’ve had 2 menu prices increases to help offset. Hopefully, cheese and flour will continue dropping and I can get it back under 30%.
You are not supposed to divide your purchases. You are to use the food usage. You need to have a Beginning inventory count + food purchases - ending inventory count. Take this figure and divide into sales.
One of the red flags that went up is you have a very large variance from one month to the other. Please count weekly. Remember, food cost is based on food usage. If you don’t use much of a certain item, don’t count it. Just have a short list of your high usage items. Then at the end of the month, you can count everything. The weekly inventory will give you a “heads up”. Also, have some type of portioning in place for EVERY pizza. You can use spoodles, cups or whatever.
Also, make up portion charts with the item and amt of food on each pizza and also each size.
Buy a scale. I don’t care what type of scale, just get one. Something is better than nothing. Once you get everyone trained on using your “tools”, then consider a nicer scale. I always tell my employees that if this was their store and they owned it and worked here everyday, would they like for me to give their food away. The answer is always no.
I count inventory each and every week. Takes me 30 min-start to finish.
Lots of “seasoned veterens” on this board will chime in with their take on portioning and other related topics.
You should know 2 numbers each week…food cost…labor cost…These are the 2 most important % that you should focus on daily. Controlling these will allow the flow of sales to go further down your P & L.
I agree with the above posters, although if you are dividing food purchases / sales for a long period (i.e. 6 months or a year - inventory doesn’t really come into play as much). The best way to control food costs is through running weekly inventory and seeing where you’re high or low and why.
Menu pricing and portion control play a HUGE DEAL into food costs. Most people watch vendor pricing like a hawk, and freak out at 10 cent increases, but their best pizza maker is throwing dollars worth of cheese on pizzas compared to what it’s supposed to be.
Also, be sure of your menu pricing, don’t just think. Do the math, figure everything out. I think you’ll be amazed. It will take you a couple days to calculate it out, but if you can accurately price out your menu you can make money. Think about it, if you were running a distribution business, wouldn’t you know exactly what you paid for an item, exactly what you needed your markup to be, and make the price exactly cost + markup? If you were running a car lot, wouldn’t you know exactly what you paid for that car, and exactly what you needed to make on it? The same is true for a restaurant, although 50% (or more) of restauranteurs don’t figure their product costs because there are so many ingredients involved and they don’t portion them out. It is critical that you serve good food, but it is also critical that the business side of your business is ran just as any other business would be, not related to industry. People get too wrapped up in the food sometimes and forget that this is still a business, and in order to make money and stay in the marketplace for a long time, there are certain areas that should not be overlooked.
We are running 36%. This includes food/alcohol/paper/supplies. As with others it used to run around 30…maybe it is time to revisit the menu prices, last menu increase was December 2007.
I can’t agree more with the other posters. GET A FOOD COST PROGRAM! We “thought” our menu prices were correct from the owner we bought from and found some things we were losing money on when people ordered, granted they were side items but it all add up, so we immediately revised our menu to price things accordingly and saw a dramatic drop in %'s.
Well I think $600 is a lot unless it has inventory tracking as well. The program we use is Food Cost Pro from Point of Success. It was only $99 when I bought it. It has the ability to put in all your ingredients with prices and then create entrees to see EXACTLY how much it cost you to make that item, your contribution margin, your actual food cost per entree and even suggested selling price for certain food percentage. You can change prices as new invoices come in so you get up to date food costs, however it does not track changes on prices. I have asked for that ability and they took the suggestion but no date set or if it will even happen at all. The other thing is the progam does not do inventory tracing which would be awesome! But if you want to find out exactly what an entree/pizza costs and see if items from your food provider are going up this is awesome!
You need to break out your costs in what ever format you want…I used to do cheese, other food, beverage and paper separately…And I also had an “ideal cost” for each section so I could compare my actual costs against projected costs…
We roll it all together. If we use it up it is included. Drinks, paper, supplies etc it is all there. Others will tell you that they break it up into several categories, I never felt it was worth the time to do so but that is just me.
If we start being too free with cheese, I will add a separate cheese count and do it every day.
No it is on computer. The inventory value is calculated in the POS system. The rest is an excel spreadsheet with beginning and ending inventory and purchases. The POS system would do all of that too, but then it would not be linked to my cash flow projections that are in the spread sheets that I built.
“meant to help the manager make decisions. Will separating out the costs help them make decisions?”
The answer to that is “no”. I do not find anything useful in splitting out the supplies for decision making. They do not vary much and we buy them as we use them. In the end they average out over time. Same with condements like parm and red pepper. We just charge them off on the invoice the come on and don’t bother counting them. In an inventory of several thousand dollars (Up to about 15K in high season) 20 dollars plus or minus of basil and oregano and salt makes no difference at all.