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Looking for a basic for food cost formula

post #1 of 14
Thread Starter 
Hi guys, first of all, I am not a Chef just the main cook at sport bar. I never go to any culinary school, I'd love to maybe someday if I have some money. Well, the owner asked me recently if I can do something with the food cost, I wonder if you guys can show me how to calculate food cost, just the simple way or a good culinary book for that. I really appreciate it, thanks.
post #2 of 14
The simplest way to calculate it is the part (the amount spent on food) divided by the whole (the total amount of revenue)...that will give you your percentage...I like to keep a daily running food cost so I can catch a high food cost early and fix it before it gets out of hand. I also run a monthly food cost where I include my inventory. So you would take your beginning inventory add your food purchases. Subtract from that your ending inventory and you have your cost of food sold. A book that I always turn to if I have questions or need help setting up excel spread sheets for my costs is Food and Beverage Cost Control by Jack Miller Lea Dopson and David Hayes. I got this book at culinary school and it is dated now but they may have updated versions. I hope this helps.
post #3 of 14
If I may add to this. Perhaps this task seems daunting to you having no experience doing this. There are a few things to remember. The key to being successful with food cost isn't necessarily the actual calculation, but the process. By observing, watching, and monitoring the business you'll find out some interesting things. For example, without doing a proper inventory you don't really know what you have on hand. As a result, theft and pilfering run rampant no matter how well you think you know your colleagues. Sad but true. Reading invoices from your suppliers will give you an idea of how much you're spending on the various products. We run a larger business but its always a good idea to have two suppliers for each aspect. You can then compare prices etc.
Perhaps a better place to start is to do a proper costing of your menu. Write down every single ingredient that goes into a particular dish or plate. Start figuring out how much of each ingredient (based on weight) you use taking to price from the invoices from the suppliers. Add it all up, and try to get the % of the selling price as low as you can. It's not really as hard as it sounds but it takes a bit of patience to get it done.
I'd be happy to answer any questions you may have so don't hesitate.
Regards,
Mick
post #4 of 14
Thread Starter 
Thank so much for the responds, guys, I am so glad to be a member of this forum.
post #5 of 14
Italchef put this in the best and most understandable terms. I would also recommend you check your trash cans. I worked at a place that looked at their menu price and decided their food cost was in line (based on their selling price in relation to what they paid their suppliers). Italchef says to look at your food cost in relation to total expenses, which is a very important thing as this will give you real numbers. The place I worked at only looked at their food cost in relation to the the menu price. What they didn't see was the amount of food that went in the trash can, which skewed their numbers. If they would have looked at true food cost (as Italchef is saying) they would have seen the real picture and their true losses. And just for the record, if you run the kitchen, you are the "chef". The title "chef" is not like the title "Doctor". It means "chief" and has nothing to do with culinary training or the lack of it. I am Executive Chef in my current job because I run the kitchen and do other things that are expected of an executive chef. If I came to work for you, I would be a cook and you would be the chef as you run the kitchen. There is much confusion on this issue, but the term "chef" pertains to a position, not any specific knowlege or experience. I have suppliers who tell me they have accounts where the person they deal with, when asked who they are, say "I'm Chef so-and-so", and insist on being called Chef. This is a source of high amusement for us as it just shows how ignorant and full of themselves these people are. Emeril Lagasse, Wolfgang Puck, Rick Bayless, Alice Waters and countless other famous people go by exactly those names. We all know they're chefs by trade, but that's not how they title themselves. :lol:
post #6 of 14

Hello Mick,

How are you doing? So I am in the same situation as Jowocook, trying to figure out food costs. so from reading what u wrote and I hope I get this right I am taking the food inventory and getting the prices for each items in there boxes and then I am adding the total (meats, seafoods, produce, paper goods) invoices up together and subtracting the end cost? But what about the waste and the credit costs. How do I added or minus these also.I am so confused. Could u please walk me threw everything step by step. Also how do I make a excel spreadsheet with all of these items?

 

Thank you for your time

 

Sincerely

Vinny

post #7 of 14

 

Let's start with the basic food cost percentage formula: FC% = (BI+P-EI)/S FC%: Food Cost Percentage BI: Beginning Food Inventory P: Purchases EI: Ending Food Inventory S: Food Sales

 

To be easiest break down the formula... start with Purchased ( invoices ) divided by food sales. Fod sales only to get proper food cost.

You can then get further detailed as the formula states.. first start by having a beginning of the month  inventory so you know how much your last purchased price was for all items you have in  your place.

 Then divide by all food purchases you made during the month... then take an end of the month inventory and subtract that ..... finally divided by food sales. this is a very acurate way to do food cost %. The point also being you can see a pattern of spending and or sales flucuation... The goal really being to have a beginning and ending inventory that is similar... But this a practice that has been lost by many...have fun crunchin the numbers

 

post #8 of 14

COST DIVIDED BY SALES EQUAL PERCENTAGE  

As someone stated above everything should be broken down by weight. Why? because when we set up a plate we go by portion  size in ounces  Example a pound of chicken breast trimmed cost 2.99 we give a 6 ounce portion . Divide 2.99 by 16(ounces in pound) gives us cost per ounce>Times this number by portion size(^6ounce) equals our cost per portion 18.69 per ounce times 6  or112.125 per portion round off to 1.13 per portion . 1.13 x % = Selling price . Sounds difficult but after a while you will do it all in your head on your feet. This method applies to individual items . It does not apply to monthly inventories or waste which is a seperate matter.

Chef EdB
Over 50 years in food service business 35 as Ex Chef. Specializing in Volume upscale Catering both on and off premise .(former Exec. Chef in the largest on premise caterer in US  with 17 Million Dollars per year annual volume). 
      Well versed in all facets of Continental Cuisine...

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Chef EdB
Over 50 years in food service business 35 as Ex Chef. Specializing in Volume upscale Catering both on and off premise .(former Exec. Chef in the largest on premise caterer in US  with 17 Million Dollars per year annual volume). 
      Well versed in all facets of Continental Cuisine...

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post #9 of 14

Very interesting response! Now I have a question for you regarding the food "loss". The food being thrown away. Is there any way one can simply add this variable into the food cost equation? Say adding 10% to the food cost when equating by the menu price?

 

Example:

 

Menu Price - (Food Cost + 10%) 10% would be the amount of food thrown away?

 

Is 10% even a realistic number or would you say the throw away ratios are much higher. I'm guessing it would differ from kitchen to kitchen, chef to chef.

post #10 of 14

Cost of Food Sold

Unit Name:                             

Accounting Period:                   to                   

Beginning Inventory              $                                   

PLUS

Purchases                                $                                              

Goods Available for Sale                                                                          $                 

LESS

Ending Inventory                   $                                               

LESS

Transfers Out                         $                                              

PLUS

Transfers In                            $                                              

Cost of Food Consumed                                                                           $                 

LESS

Employee Meals                     $                                               

Cost of Food Sold                                                                                      $                

 

 

Menu Analysis Worksheet

Unit Name:                                         

Date:                           

 

Menu Item

Number Sold

Selling Price

Total Sales

Item Cost

Total Cost

Item Contribution Margin

Total Contribution Margin

Food Cost %

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average

 

 

 

 

 

 

 

 

 

These two forms may help.  Overall food cost and food cost per menu item are different.  Waste, theft, and ruined food is part of your food cost.  By controlling these factors a chef can reduce their food cost. 

post #11 of 14
Quote:
Originally Posted by TheCreativeCave View Post
 

Very interesting response! Now I have a question for you regarding the food "loss". The food being thrown away. Is there any way one can simply add this variable into the food cost equation? Say adding 10% to the food cost when equating by the menu price?

 

Example:

 

Menu Price - (Food Cost + 10%) 10% would be the amount of food thrown away?

 

Is 10% even a realistic number or would you say the throw away ratios are much higher. I'm guessing it would differ from kitchen to kitchen, chef to chef.

cant flat 10% it like that 

 

you have to do a per item basis 

 

like beef tenderloin 

 

lets say a cryovac beef tenderloin costs $100 and weighs 7 lbs   which would seem that 14.28 is your $ per lb 

 

now we weigh while we break down 

in cryo weight = 

out of cryo weight= 

trimmed portioned total weight = 

usable trim weight = 

unusable trim weight = 

 

the unusable trim and the difference in the cyro weight is your loss 

 

the portioned total weight and the usable trim sill has a value of $100 the thing that has changed here is your $ per lb 

 

lets say you get 5 8oz steaks and  1 lb of usable trim which is a total of 5.5 lbs and you have a loss of 1.5 lbs 

 

which now makes your product cost $18.19 per lb 

 

which makes each filet $9.1  per 8 oz

and that last 1 LB of trim at $1.13 per oz

 

 

 

if your goal is to meet a 25% food cost then your $9.10  filet cost must be divided by .25  and give you a menu price of at least $36.4 plus the same math ratio for anything else on the plate 

 

unit price / cost % goal = menu price minimum 

 

9.1 / 0.25 = 36.4  

 

and the trim must be sold at least at 4.52 per oz 

 

 

do not let menu price dictate your food cost, the food cost dictates your menu price 

 

sometimes its unavoidable like if you have clientele that has a price cap - like nothing above 29.99 will sell then you must abandon any menu items that would be above that price to meet your % or drop your portion size or get lower quality items at a lower unit cost 

post #12 of 14

lol i misunderstood the question 

 

gift, theft, waste and spoilage losses are hard to predict, adding a flat % may cover you in this case 

 

gifts and employee meals, you want to make sure that all items are still being ordered and then recorded as a comp so you can see those numbers in the sales. these are perks offered by the owners and should not effect your cost % 

 

theft,  spoilage and waste is strait loss and you have to eat it in your cost

you can add % to the pricing formula i posted above and you can alter each menu item in potential for loss 

 

[ (unit price) + (potential for loss coverage%) ] /food cost goal = minimum menu price 

 

you are more likely to have spoilage for a fish than for a steak so the % loss coverage should be higher for the fish than for the steak unless you have no menu price cap and a flat % will work. 

 

making sure your kitchen staff records all waste and spoilage can help with knowing where to adjust your ordering habits watching for Over Prep and also help you adjust the % for future costs 

if something gets thrown away the chef MUST know about it 

 

 

 

also check this conversation 

 

Menu / Product Question
started on 10/22/16 last post 10/30/16 at 7:08am 12 replies 344 views
post #13 of 14

Food cost is a tool. Menu price should be a refection of the food cost that you set as your goal. If you tack on a percentage to cover waste, you will no longer receive an accurate measure of your food cost. I guess it depends upon whether you want to look good on paper or have an honest appraisal tool upon which to base your managerial decisions.

 

If I change the speedometer in my car to reflect that I am going 55, when I am actually going 65; it doesn't change the true speed that I am going and the cop sitting behind the tree doesn't care what my dashboard says, so why would I change my speedometer setting.

Wisdom comes with age, but sometimes age comes alone.
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Wisdom comes with age, but sometimes age comes alone.
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post #14 of 14
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