Regardless, assigning value to food cost is one of the quickest methods to get onto the path of profitability. Nobody likes a stock count. We've listed a few simple strategies to help you lower your food cost and keep it there to prevent overspending where you don't have to. If you run a moderately successful independent restaurant that seats about 100 customers per day you are looking at losing $30,000-$50,000 per year when your food costs aren’t optimized. Costing recipes can seem daunting if you have an extensive menu. From here it is a lot easier to get a bigger picture of your restaurants daily operation and whether or not it is possible to break even or even turn over a profit. If you are selling a dish at $10 and you find that your fixed cost per meal is $7, your dishes can cost you no more than $3 for you to make a profit. The case study of John King is pretty spectacular. Understand how each ingredient affects your profit margins. This includes recipes, food costs, sales analytics, procurement, inventory, production, product development and dietary information. This example illustrates how food cost variance impacts gross profit. Suppose the revenue that week is 9,000 pounds. Please select your VAT Rate: 20% 0%. Despite its importance, food costing is often not taken seriously by restaurant operators. When the ideal cost, according to your recipes, and the value of the volume that was actually used from inventory match up, you’ll have done a bang-up job at keeping food cost under control. © 2020 Apicbase.com. Obviously the same applies for smaller restaurants too. Menu price based on a 30% food cost the formula: $7.15÷.30 (30%) = $23.83. Discover practical tips and answers to close the gap between actual en ideal food cost in the post: 7 causes for variance between actual and ideal food cost. To calculate the ideal food cost, first determine the food cost of each menu item. There is no need to worry if it sounds complicated. Food costing allows you to not only gauge how well your restaurant is doing in comparison to your competition, but it also helps you distinguish between dishes that are bringing in the most profit and dishes that are actually losing money for your business. The first step in creating a menu pricing strategy for your restaurant is costing out your menu. If you want to get straight to our free to use food cost calculator, click the link below to download it right now, or, Step 1: Break up each dish into its ingredients, Step 3: Figure out your fixed cost per meal served, Step 4: Calculate what percentage of your menu price comes from food. So now that you have a grasp on food costing and its importance, how do you optimize it? Factor pricing. Save yourself countless hours and download our easy to use food cost calculator now. Pricing. In the example below, you could change it to a number such as $14.50. 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