What is the food cost formula and how can you use it to calculate your restaurants food cost percentage. I will explain everything you need to know about food costing in this video.
As a restaurant owner, manager, operator or chef, you have to know how to calculate your food cost so you can lower expenses and increase your profits.
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Nice video but a little confusin at the same time. Maybe somone could help me out on this one. He said in the hamburger example that it took 2 dollar to "prepare" the burger. is this with or without calculating power,delivery,sallary for staff and so on?
If its not included how will you know how to price things otherwise? Im starting a Smoothie place real soon and would appreciate all the help I can get.
Great information BUT in this new age we have programs for up to date menu pricing and food cost targets. I think its called Chef Tec. The one I used. I'm 82 years old and have been out of the restaurant business for a number of years. This is to overwhelming for most people. Invest in a good program and when you get to the bottom line and it shows if you need to raise or lower prices. Example each time you receive food or goods into your restaurant the invoice is added to the program and divided into the categories you suggest. At the end of the month you receive a P&L Statement (Profit & Loss) Look at the bottom line and the percentages of all categories. Food cost will go up and down but most percentages will stay the same. Volume go up the more towels you needed cleaning. Food cost will differ if the cost of food goes up so does the food cost percentage.
If the food cost goes up the incoming price is the same.Someone is over portioning food, Giving away product. OR STEALING FROM YOU NOT PUTTING SALES INTO CASH REGISTER. (this is the most damaging and common) Restaurant business is the hardest business to control and make money with. If your a fry cook or a waitress forget it till you've had experience in all phases of the business.(and willing to do them) A good program will help a lot,but there's a lot more to running a restaurant then can be taught to the novice. You need a feel for it. 1. Always try and give your customer more than they paid for. 2. Parse and appreciate you loyal staff and don,t be scared to fire the rest 3 Don't try to cut costs by cooking a shift. Although you must know how from cooking to washing dishes. You must greet your customers but not smother them.(Calling in the restaurant business, working the floor. The phases are 1. Listing and seating customers 2.Taking orders and hanging the guest check. 3. Cooking 4. delivering the food 5. Washing the dishes 6 Taking cash.
You start with #1 the restaurant is full or seating slow. Before you get to 4 you check and help with number 2 & 3 and so on, at the end you might be taking cash.If not go in and help the dishwasher wash the dishes. Working the floor is one of the most important jobs a Restaurant owner can do. Like driving a car You paid for the gas, checked the tires, cleaned the car. Its now time to drive the car and only you can do That! If you were a customer or an employee what would you think about this restaurant owner?
HEY PLEASE ANSWER>WHAT IS ANY EASY FORMULA TO CALCULATE WHAT TO CHARGE FOR FOOD .
I HAVE BEEN DOING 25% CAUSE ITS EASY.SO SAY IT COSTS $1 TO MAKE A SANDWICH AT 25% I WOULD CHARGE $4> WHAT IS AN EASY FORMULA TO CALCULATE DIFFERENT % ? SO SAY I WANT 21% AND IT COSTS $1 TO MAKE SANDWICH , HOW WOULD I CALCULATE THIS? PLZ HELP!!!!!!
The quality of food will increase had free be a reality. Profit margins would not need to be thought of. How much can I sell will not be thought of. How attractive I can I make my cheaply made product will not be thought of. Those are not Gods thoughts. Gods mind needs to be in us. Freely you have received all things from God. Freely give. People know what they like and want. God did not keep any good gift from us. Don't keep any good gift from another person. Big corporations need to change. God is the biggest corporation there is..He has a gift for the saved that is greater than any product in your stores not charging anything for them. Be like God is in his character.
Stoked to find your youtube. We are just starting to gather data on starting up a restaurant/retail combination location similar to MOX Boarding House in Bellevue, WA, and your videos are extremely helpful!
Food waste is not factored into your food cost. It is part of your cost, if you kitchen is wasting food that is what your food cost should determine. If you want to track food waste, just use a simple waste sheet and track what gets wasted. It is a good practice.
Thank you chef for your reply I agree with you but still have doubt you said to me to Divide the Total cost to prepare the Food of 3000 pax by the Selling price to get the food cost, but my question is To arrive the Selling price of 3000 pax what should I do chef
Chef suppose if a party comes for a 3000 pax for which the food is in buffet set up which consists of two salads, Two Appetizers, Two soups, Two Main course Lamb & chicken, two desserts how do we arrive the food cost after the party is being completed or before starting
You can use similar forumlas for plate cost, but not the divide by 30-35%, that is to get a potential selling price is the totally wrong way to do it. Check out this video: https://therestaurantboss.com/how-to-set-prices-on-your-restaurant-menu/
I don't get into that specifically. You just weigh the ingredient, then cook it or trim it and weight it again. Find out the loss, add that to the purchase cost. If you lost 10% of the weight, then add 10% to the purchase cost.
Hi! You can follow the food cost formula in this video. To explain further, I'd need to jump on a call with you. You can grab a quick One Thing call at therestaurantboss.com/hire-me and we can go from there.
New area for me as I’ve taken over a 15-acre recreation park that has a snack/coffee bar; this has been very helpful in many ways. Introducing terminology is a good starting place and will be looking at your website. Mahalo Nui Loa from Kauai
Excellent video and very informative and easy to follow. Exactly what I was looking for. You cleared up my thoughts and put them in order and perspective. But my question to you is about waste management. Although waste is inevitable, I prefer to monitor and limit as much as possible ( I hate unnecessary waste based on childhood training). Waste numbers cant be factored in with usage numbers right. So should waste be calculated into dollars and somehow deducted from the profit? Wouldn't that produce a more precise and true number in profit? Hope I'm making sense to you. Thank in advance for your reply
Question... I've found my place, I know what I'm doing with it, I already have a pretty extensive business plan being written... What's a decent time frame to ask the previous ownerto show their books on the business? The owner I'm buying from claims to have the books for the last 20 years, but is only willing to show 6 months to a year tops? How red of red flags is this?
Definitely, red flags, if you are buying their business. If you are just buying a location with equipment than who cares....keep in mind if you are buying used equipment, don't pay for the business. Most people think they are buying a business but are only buying used equipment. I don't mean on paper, you are buying a business on paper, I mean the price. Businesses have systems, clients, processes, procedures, marketing, etc... otherwise you are just buying equipment.
Thanks for posting the video. Once you obtain some of these hard numbers how do YOU put them together and make sense of the data? Perhaps maybe some kind of profit/loss assessment? Determining how profitable your business really is is paramount of course... easiest system possible?
Love your videos, but you say that food cost is not what you spend on food, but that's exactly what food cost is. You're defining food cost as a percentage, which is called (drum roll): food cost percentage. If you add up all your ingredients and what they are costing you, that's the food cost, and that's the money you spent. Tell me if I'm missing something here. Thanks.
Hi boss, I like your video and thanks for your high efforts to enlighten us.
I have a question what did you calculate, the foods wastage include the formula or it's goes into a different account?
Also I remembered when I was studying managerial accounting I had to add many things in regards to find the cost and how many should I make of products to gain a profit for example Labour, machine, clothe or are material, electricity.... etc. All that's were factors to initiate the cost of the product.
I hope you can explain that's to me
Thank you so much for posting these videos! I've been wanting to start a restaurant for a while now, and only now have a concept that I really like; but I never took any business classes or anything and have no idea how to bring my vision to reality. I just watched a couple of your videos, and I think this will be perfect to get me started! By the way, Cannabis is about to be legalized where I live, and my concept is a cannabis bar (edibles), that offers regular food and DIY kits. (inspired by DIY Bar in Portland.) If anyone has specific advice for me, please let me know!
I am thinking of opening a very small and very cheap concept burger and shake joint around pensacola area. I talking about cheap concept because I recently lost lot of money in a cafe . I have also learned my lesson regarding leases . Absolutely no signing personal leases and also thoroughly reading and understanding through a professional also no long term unless you a very safe option of terminating the lease with minimum damage. I need your thoughts on this concept . i can reach you via your contact info if mentioned . thank you
Hi Rajiv! Sorry to read about the cafe and glad you had some "lessons learned". You can read more about my coaching services at therestaurantboss.com/coaching. That way we can block time and really dive into your questions.
Well there are 3 methods of handling this. My favorite method is to account for all the food sold, then remove the full sales price from the income line and expense in a different account. So if you sold $2,000 in food today, and had $100 in coupons. You adjust your sales from $2,000 to $1,900 and expense the $100 in coupons to marketing. Now you can run your purchases against 2 numbers. The food cost for you chef would be against the full sale, they did their job, not the chefs fault you decided to run a coupon. Then for your true food cost, you can run it against the discounted number. BACON will handle all this for you if you are not using a simple food cost program please check it out, https://clickbacon.com
I do not recommend where to order food, whatever is best for you. To calculate the cost of food on a plate, add up the cost of all the ingredients to make the plate of food. This very complex, but actually simple.
Is there an application that can help with plugging in numbers for determining the plate cost? I have quite a few menu items and I want to know the cost of each one, it’s so time consuming tho. Any advice or help is considered. Thanks!
There are many out there but to be honest they are more complex than they need to be, just pull out a piece of paper and do some math. You don't have to be perfect, just within a few cents. I think its more important if you are overwhlemed by this process to know your weekly and month total food cost, rather than each plate. Then if there is an issue you can dig more into each plate. Have you seen this software: https://clickbacon.com. My team created it for this exact reason.
Ryan, I'm opening a Kosher Deli and HealthFood Market. Could I use the generic COG calculation worksheet to flesh out my health food market sales percentages? I understand preparation costs are factored in COG formulation not shelved products.
Thank you Boss, I am very happy watching this video ,It is very useful for restaurant business man or who wiling to start restaurant business for them.. I am a chef, I am very interested to learn and grow my ability and skill more and more about like that , Thank you so much I go in your website,,, and study ,,, . MY numbe: 0097450570686, I am in Qatar Now.
Great information! I am a former restaurant and bar operator who now does restaurant brokerage in south Florida. I do beg to differ on being able to estimate food cost. There are “ traditional” numbers that food cost should be around. When staring up and doing a business plan these can be used I believe. Obviously there will be anomalies as in when limes went through the roof and cogs went ballistic for anyone who used them extensively.
The Restaurant Boss absolutely. Big difference between a Mexican restaurant and a high end steak place when it comes to food cost. I know a guy here in Delray who runs a 50% food cost but he also does bottle service later in in the evening as his restaurant morphs into a club/bar. The margin on the bottle of vodka is much better.
Off course for budgeting and pre-opening, but telling an owner they are running a 33% food cost and that is too high without knowing anything else is JUST PLAIN IGNORANT. To your point, this is why I wish more prospective owners would consult with an expert when putting together a budget as we have seen enough examples to know where they should be based on the type of service, location, quality, guest expectation etc...
great video: " A financially healthy restaurant typically has food costs between 25 and 35 percent, but you can get away with spending more on ingredients if you spend less on labor, and vice versa." from smallbusinesschron website
I have a business partner who insists that food cost is with labor involved. The problem here is that by adding 6 minutes labor to cooking fries will with food make to total cost come out to $1.89 making it 80.34%. Is he right in that this is the method of calculating the cost?
Well your partner is completely wrong by industry standards...also my common sense it makes no sense. You can't break down each task with a labor component. You can add them in total. Look for my videos on Prime Cost.
I am planning to start a small food venture.. But going forward want to have outlets of it all across..
Should I first start a home based venture.. If so would it make it difficult for me to incorporate values later in a store format?
As in if I want it to be presented in very earthy fashion would it matter if for now I do a home business and sell in plastic containers
Hey bud I have been working at a restaurant for so long. Started as a regular Cook moved up to sous Chef, well we are constantly looking for new Cheffs because they keep quitting well I know everything there is in that restaurant. They pretty much put me in charge and I am running the kitchen. In no way am I calling myself a chef because I still have a lot more to learn. Just really started studying food costs and would like to know. What should I do when the Chef didn't have the paper for our last food purchase so I could take a beging inventory?
Thank you so much for being kind and so clear , after few days I have an interview for restaurant manager ( currently I am working as supervisor ) please let me know what they want to know from me . Thank you
if by area you mean you manage multiple stores, than that is exactly your job. To ensure that each unit is constantly raising their standards, following processes and procedures and exceeding guests expectations.
Hi Ryan, what would you do if you start a new restaurant and you have an existing restaurant but you want to transfer some of the stock from the existing place to the new place? where would you add that stock value to your COGS calculation? with purchases?
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