For restaurant owners, one of the most important metrics to monitor is the food cost percentage. It can help you analyze menu items, determine which ones bring in the most profit, and change menu items if necessary. With a clear picture of your costs, you can make informed business decisions.
To calculate your food cost, you need to know the cost of all the ingredients that you use to make a dish. You also need to know the amount that you sell each week. Ideally, your food cost percentage will be close to 25%. However, this is not always the case. Some types of restaurants, such as steak houses, can run food costs up to 35%.
Aside from analyzing your menu and cost, you should also take into consideration your inventory. Food cost per serving is a measurement of how much a meal costs. If you have a large amount of inventory, your food cost percentage will be higher. On the other hand, if you have a small inventory, your food cost percentage will be lower.
To calculate your food cost percentage, you can either go to your cash register and manually input each item’s price, or you can download a free downloadable spreadsheet. Enter the ingredients, ounces, and price, and then check the box labeled “Calculate.” The spreadsheet will automatically compute the number of ounces and the price.
If you’re trying to find ways to reduce your food cost, you should consider using more affordable ingredients. For example, pasta is cheap to buy in bulk. You can also choose to serve seasonal dishes. Those are generally cheaper because they use ingredients that are in season. Another option is to offer limited-time discounts on certain menu items. This can motivate more people to order from your restaurant.
In addition to reducing food costs, you can also boost profitability by increasing your menu’s overall sales. You can increase the value of your menu by redesigning it. By changing your menu, you can increase your profits by 10 to 15 percent. When designing your menu, you can choose dishes that are profitable and add new menu items to your menu.
If your food costs are too high, you may need to rethink your menu. Changes such as a change in portion size can affect your food cost percentage. Also, you can choose to remove menu items that are outside your food cost margin.
Another way to control your food costs is to find more affordable vendors. Many suppliers will offer discounts to businesses that purchase in bulk. Using a bulk-buying group can also save you money. Finally, you can shop around for better deals.
To calculate your food cost percentage, start by adding up all the ingredients that you use for your dish. Then, divide the total by the number of meals that you sell. Once you have the total, you can divide the number by the revenue that you earn from your food sales.