The document discusses the importance of food costing for maintaining profitability in the food business. It explains that a high food cost results in less profit, while a less food cost leads to higher profit. It then provides the basic formula for calculating food cost percentage by dividing the total cost of food sold by the total sales value. Maintaining a food cost percentage between 30-33% is considered ideal for balancing quality and profitability.

1. Food costing
©Lokendra kumar

2. Food costing
This is a most common and important term used in food
business to know the profitability at the end of the
day/month
High food cost = less profit
Less food cost = high profit

3. In a food business it is very necessary to maintain the quality and quantity of
food to justify the value for money paid by guest/customer. And to keep/add
long-term
relations
with
them(guest/customer).
Every organizations have their own set standard percentage of food cost &
profitability and this must be followed by the chefs or food handlers to
maintain the quality of food and to keep organization’s profitability

4. How to calculate food cost
Cost of food divided by sale of food x 100 = food cost %
It means…
If food cost of 1 dish is 500, and sale is 1500, the food cost% would be 33.3%
Basic Formula is…
Value of opening inventory
+ food purchase
= total cost value
- value of closing inventory
= value of food consumed
-Value of employee meals
= total cost of food sold
Food cost % = (total cost of food sold x 100)/total sales value

5. Maintaining food cost at 30-33% is ideal condition to keep
balance between quality and profitability
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