https://foodtruckempire.com/restaurant/menu-recipe-cost-tool If you want to keep the money coming in and thrive in an industry well known for thin margins, knowing the food cost percentage for each of your menu items is a good place to start. Recipe costing, Nutrition Profiling, Inventory, Food costing, Wastage tracking, prep list, order list, event planner 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 wrap—the potato, vegetable, salad, and bread that come with the filet, as well as any condiments—costs $2.50. Meet Big Bang Bagels, a fast-casual restaurant chain with 24 outlets all over Europe and the UK. The actual cost of a menu item divided by your ideal food cost percentage (typically 25-30%) Raw Food Cost of Item + Desired Food Cost Percentage = Price Since $14.16 is not an ideal price, consider lowering the price to $13.99 Not always the most reliable pricing method because of indirect costs, price instability, and competitor’s costs. 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. The food cost percentage formula is actual food cost divided by revenue for a specific period. Finally, divide the result into your total food sales. Let’s do the maths. One way to ensure that your prices are in line with that food cost is to triple the food cost of the item. 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. At the bottom of the column with your recipe cost you add everything up. Combine the cost of each ingredient to come up with the total cost per dish. In other words, you multiply by the sales mix. or number of pieces for each ingredient. All  rights reserved. It is also a prime element for calculating food cost variance. How to Calculate Food Cost per Serving (or food cost per menu item): Food Cost Per Dish = We'll sell the Jumbo crabs for $16 a half dozen. Pricing is a little more complicated than that. There are four main calculations to stay on top of: Comparing these figures will help you adjust workflows and maximise profitability. The definition of ideal food cost is the cost expected for a specific period, based on recipes and the number of times each menu-item is sold. Regardless, assigning value to food cost is one of the quickest methods to get onto the path of profitability. How to Calculate Food Cost in 2020 (The Ultimate Guide). New restaurant and food truck owners alike typically use one of the following methods to determine menu pricing: Food-cost percentage pricing. If you are keen on saving time for your team and yourself, check our inventory module. How to calculate food cost percentage is used to calculate the difference between the portion cost and the selling. Food costing can often seem like a difficult task for most restaurant operators. If Burger King doesn’t optimize their food costs down to one cent, they are losing $167,000 per day, or $61 million a year. Let’s take Burger King as an example; Burger King sells around 16.7 million burgers per day. It is an industry standard that even the biggest global restaurants put into practice. In this method, you determine the portion cost by dividing the purchase cost by the portion. Therefore, the entire meal costs you $8.50. Next, multiply the total cost by 100 and divide it by your total sales. https://www.kitchencut.com/how-to-calculate-food-cost-for-a-recipe This could be because of the assumption that food costing is a difficult process, or because food cost isn't as tangible a cost to your business as rent and labor. Simply update the ingredients list to update all recipes with current supplier prices. Your POS system should be able to hand you the sales mix at the touch of a button. It all starts with some basic calculations and the right food cost formulas. Apicbase is the #1 F&B management platform for multi-unit food businesses, hotels, restaurants, ghost kitchens and large scale catering. For example: if a menu item is priced at $13 and the food cost was $4, your food cost percentage is 31%. Assuming your daily fixed costs are $1500 and on average you serve 150 customers per day, this means that your fixed cost per meal served is $10. Fast-casual restaurants generally find themselves on the lower end of the brackets, while high-end restaurants also tend to have a higher food cost. food cost, personnel costs and fixed costs. Stock counts can be done on a tablet so data won’t get lost. This is found by dividing food cost by menu price. Make sure to check each dish to determine whether or not the price covers the food cost and fixed price per dish. The Ultimate Guide to Lean and Efficient Inventory Management for Restaurants, Hotels & Caterers, 9 ways to reduce food cost without giving in quality, 7 causes for variance between actual and ideal food cost. Anyway, back to food costing, to determine your actual food cost, you need to know five things: At the start of week 34 you count everything in stock and multiply the items by its money value. With countless moving parts and heavy admin, F&B management can feel like a major pain. In other words, it is the depletion of inventory set against its value in money. Use the following equation: Price = Raw Food Cost of Item / Ideal Food Cost Percentage. Factor pricing. This will ensure your sales will be kept within a cost positive range. Ideal and actual food cost percentages give an idea of how outlets are performing, but only a comparison of the two calculations shows if food cost is under control. Design your menu to highlight the most profitable menu items. 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 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. In the restaurant industry, your main method of increasing profits is through selling food. Without proper food cost control, the head office would have never known gross profit was taking a cut because of poor food cost control in Brussels. Suppose the revenue that week is 9,000 pounds. This article will take you through an in depth explanation of what is food cost as well as how to accurately calculate food costs at your restaurant. The first step in creating a menu pricing strategy for your restaurant is costing out your menu. Costing recipes can seem daunting if you have an extensive menu. The complete equation will be as follows: $14.29 (Price) = $4.00 (Raw Food Cost of Item) / 28% (Ideal Food Cost Percentage). The reason being that fast-casual restaurants have a scale advantage and more often than not have software helping them to minimise waste, keep stock lean and ordering efficient. Most importantly, it allows you to set a standard food cost percentage across the board, and eliminate any menu item that costs too much (or find a way to bring the food cost down). Competitor pricing. 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