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How to Calculate Your Food Cost

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Designed and Written By: Steve Ngo

Knowing how much it costs you to sell the food in your restaurant is critical for running a profitable restaurant operation. Follow through on our presentation to learn how to appropriately calculate your food cost so you can stay afloat on your operation's expenses.

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Published in: Business

How to Calculate Your Food Cost

  1. 1. FooC How to Your CALCULATE
  2. 2. KNOWLEDGE iPower
  3. 3. Knowin howmuchitct youtosellthefoodyou selliscriticainrunninga profitablerestaurant operation.
  4. 4. Knowin howmuchitct youtosellthefoodyou selliscriticainrunninga profitablerestaurant operation. Knowin yourfoodcost comparedtoyoursales andyouridealfood costenableyoutostayin commanofyourrestaurant operationandultimatelyoperationandultimately controyourprofit andloss.
  5. 5. Tocalculate youractualfood costs,startby takingan inventorycount ofallyourfood.
  6. 6. Bycounting yourinventory,you willbeabletocom up withadollaramounof yourinventorybymultiplyin outhevaluofallthefood itemsonhand.itemsonhand.
  7. 7. Bycounting yourinventory,you willbeabletocom up withadollaramounof yourinventorybymultiplyin outhevaluofallthefood itemsonhand.itemsonhand. Youwillalsoneed totracanypurchasesyou madeduringthetime periodyouwanttoanal
  8. 8. Bycounting yourinventory,you willbeabletocom up withadollaramounof yourinventorybymultiplyin outhevaluofallthefood itemsonhand.itemsonhand. Doanotherinventory countattheen ofthe periodyouwanttoanalyze togettheendin inventor amount. Youwillalsoneed totracanypurchasesyou madeduringthetime periodyouwanttoanal
  9. 9. Sothe actuafoo c equatio lookslikethis:
  10. 10. Sothe actuafoo c equatio lookslikethis: starting inventory
  11. 11. Sothe actuafoo c equatio lookslikethis: starting inventory purchases +
  12. 12. Sothe actuafoo c equatio lookslikethis: starting inventory purchases ending inventory + -
  13. 13. Sothe actuafoo c equatio lookslikethis: starting inventory purchases ending inventory costof foodfor period + - =
  14. 14. Nowlet’sfigure outhowtocalculate idealfoodcost
  15. 15. Nowlet’sfigure outhowtocalculate idealfoodcost Idealfoodcost istheamountofmoney thefoodyousoldduring theperiodyouareanalyzing shouldhavecostyou
  16. 16. Nowlet’sfigure outhowtocalculate idealfoodcost Inaperfectworld, idealfoodcost=actualfoodcost Idealfoodcost istheamountofmoney thefoodyousoldduring theperiodyouareanalyzing shouldhavecostyou
  17. 17. Nowlet’sfigure outhowtocalculate idealfoodcost Idealfoodcost istheamountofmoney thefoodyousoldduring theperiodyouareanalyzing shouldhavecostyou Unfortunately, wedonotliveinan idealworldanditis nearlyimpossiblefor themtobethesame Inaperfectworld, idealfoodcost=actualfoodcost
  18. 18. Nowlet’sfigure outhowtocalculate idealfoodcost Idealfoodcost istheamountofmoney thefoodyousoldduring theperiodyouareanalyzing shouldhavecostyou Inaperfectworld, idealfoodcost=actualfoodcost Thedifference betweenyourideal andactualfoodcosts isyourvariance. Unfortunately, wedonotliveinan idealworldanditis nearlyimpossiblefor themtobethesame
  19. 19. Significantvariance indicatesthereare problemswithinyour restaurantoperation.
  20. 20. Significantvariance indicatesthereare problemswithinyour restaurantoperation. Thiscouldinclude anythingsuchaspoor stafftraining,poorprep procedures,badfoodreceiving procedures,theft,waste, under-portioning,or over-portioning.over-portioning.
  21. 21. Tocalculateyour idealfoodcostsuse thisequation:
  22. 22. Tocalculateyour idealfoodcostsuse thisequation: Recipe costfor menuitem
  23. 23. Tocalculateyour idealfoodcostsuse thisequation: Recipe costfor menuitem number ofitemssoldX
  24. 24. Tocalculateyour idealfoodcostsuse thisequation: Recipe costfor menuitem number ofitemssold idealcost foritemX =
  25. 25. Tocalculateyour idealfoodcostsuse thisequation: Recipe costfor menuitem number ofitemssold idealcost foritemX = Sumof idealcost forallitems
  26. 26. Tocalculateyour idealfoodcostsuse thisequation: Recipe costfor menuitem number ofitemssold idealcost foritemX = = Sumof idealcost forallitems ideal foodcost
  27. 27. Nowthatwe knowhowtocalculate actualfoodcostand idealfoodcost,wecan proceedtocalculate thefinalstep...
  28. 28. Nowthatwe knowhowtocalculate actualfoodcostand idealfoodcost,wecan proceedtocalculate thefinalstep... FOODCOST PERCENTAGE!
  29. 29. Foodcostpercentage iswhatyourfoodcostyouto servecomparedtoyoursales amountduringtheperiodyou areanalyzing. FOODCOST PERCENTAGE!
  30. 30. FOODCOST PERCENTAGE
  31. 31. FOODCOST PERCENTAGE Actual foodcost
  32. 32. FOODCOST PERCENTAGE Actual foodcost Total foodsales
  33. 33. FOODCOST PERCENTAGE Actual foodcost Total foodsales Actual FoodCost Percentage =
  34. 34. FOODCOST PERCENTAGE Actual foodcost Total foodsales Actual FoodCost Percentage = Ideal foodcost
  35. 35. FOODCOST PERCENTAGE Actual foodcost Total foodsales Actual FoodCost Percentage = Ideal foodcost Total foodsales
  36. 36. FOODCOST PERCENTAGE Actual foodcost Total foodsales Actual FoodCost Percentage = = Ideal foodcost Ideal FoodCost Percentage Total foodsales
  37. 37. Theresultingpercentages arethepercentofyoursales thatgoestopayforthefood yousell
  38. 38. SteveNgo

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