Learn Quickly to Control Food Costing

Food cost is defined as the percentage of total sales spent on food products in a restaurant.

A normal restaurant's food cost is 28-30% while that of a steakhouse is 35%.

Food cost is the ratio between the cost of your raw materials/ingredients and the revenue that you generate when you sell your menu items.

Food Cost – An Interpretation

The food cost is directly proportional to the cost of food.

This implies that the higher the cost of ingredients, the higher will be the Food Cost %. The higher the Food Cost %, the lower is your profit.

 Steps in Controlling Food Costs

Food costs must be controlled during all seven stages of the food flow process: Purchasing Receiving Storage Issuing Preparation Cooking (production) Service (sale)

Determining Food Cost

Food cost is the actual dollar value of the food used by an operation during a certain period.

Food cost includes the cost of food sold, given away, wasted, spoiled, incorrectly prepared, overportioned, overproduced, or pilfered.

Inventory is the dollar value of a food product in storage and can be expressed in terms of units, values, or both:

Opening inventory is the physical inventory at the beginning of a given period. The closing inventory is the inventory at the end of a given period.

The formula for obtaining an actual food cost accurately is:  

(Opening inventory + Purchases = Total food available) – Closing inventory = Total Food Cost

Determining Food Cost Percentage

Total food cost percentage is the relationship between sales and the cost of food to achieve those sales.

Analyze food cost percentage by comparing it to company standards, historical costs, or even industry standards.

To determine the percentage, divide the total food cost by the sales:

Total food cost ÷ Sales = Food cost percentage

Food cost is a variable cost: It should increase or decrease in direct proportion to an increase or decrease in sales if all of the standards and food controls are followed correctly.

Controlling Portion Sizes

Controlling portions is very important for a restaurant to meet its standard food cost.

Tools that are essential for accurate portion control include:

Scoops

Ladles

Serving spoons

Serving dishes

Ramekins, bowls, cups, and so on

Portion scales

Another mechanism for ensuring that portions are the right size is to proportion any item that can be preportioned before serving.

Monitoring Production Volume and Cost

When restaurants produce too much, food cost goes up; produce too little, and sales are lost.

A food production chart shows how much product should be produced by the kitchen during a given meal period.

A well-structured chart can ensure product quality, avoid product shortages, and minimize waste, spoilage, theft, energy costs, and administrative costs. Sales history is critical in helping management forecast how many portions of each menu item to produce on a given day.

Menu Pricing

Cost per Portion = Selling Price Food Cost %

Menu Pricing Cost per Portion = Selling Price Food Cost %