What is the food cost formula and how can you use it to calculate your restaurants food cost percentage. If Johnny wants to reduce the menu price of the dish to increase sales, he should do it strategically. It costs Johnny’s Burger Bar $4.40 and their food cost percentage is 37.5%, which makes its current menu price $11.70. Find out what a recipe costs you by creating recipes with ingredients, then adding cost to the ingredients. Divide labor cost by total operating costs For example, if labor costs $9,000 per month and total operating cost is $15,000 per month, divide $9,000 by $15,000 to get 0.6. Create your menu in minutes Find your ideal food cost percentage. Use our food cost calculator below to calculate your food cost, edible cost, portion cost, menu and plate costs. Get creative with your restaurant menu design to strategically suggest and promote more profitable items to guests. Total operating costs are the total cost of doing business; not just sales, but including costs for marketing, rent, food, drink, and any other expense. Simply divide the selling price into the plate cost for the food cost ratio and multiply the ratio by 100 for the food cost percentage. The Cost of Food Report published by the USDA is fairly detailed. Adjust menu items to match your ideal food cost percentage. You can now calculate your food cost percentage for that plate. That’s above the industry average for burger joints, which makes Johnny wonder if he should tweak his menu prices. Then, it allows you to dive into these menu items to calculate each item’s food cost, plus cost per pound and/or cost per cup for each ingredient. Plate Cost, how to calculate food cost. Calculate food sales (not total sales) for February. There is actually a simpler way to calculate the selling price of an item, which takes out the step of having to first find the pricing factor. Johnny of Johnny’s Burger Bar wants to determine his famous Johnny Burger’s cost per serving. the dollar value of the inventory you purchase throughout the week and wasn’t part of your beginning inventory. Keeping tabs on your food costs will help you set menu prices and maximize profits. While some restaurants use food cost to determine the price of making a dish for a restaurant, others prefer to use the Cost of Goods Sold (COGS), which measures the total value of inventory used to make a dish, down to the toothpick, napkin and garnishes. Be smart about your menu pricing. From there, you’ll know which menu items are most profitable and, in turn, which items to promote. You can also turn this into a percentage by then dividing the cost by the menu price. Here is a brief summary of some of the most recent reported numbers. Create a FREE unlimited account. Check out the example below to see this food cost percentage formula in action: Quick Tip: Is your food cost percentage dramatically high or low? If he sells 75 burgers a day, that $2.50 becomes over $65,700 in additional revenue per year. Use a measuring type converter to calculate cost of all kinds of ingredients. To calculate food cost for a recipe, add the total cost per item purchased then divide by the amount called for in the recipe. Find the total price of the food item. Download your free, easily-customizable menu templates today. Here’s a monthly grocery budget for the average family. Knowing this, Johnny has several options for lowering his food cost percentage: Johnny chooses to adjust his menu prices. However, these national averages vary based on where you live and the quality of your food purchases. Don’t give away too many freebies, such as bread and butter, if your actual and ideal food costs are way off. B. Johnny does similar calculations to determine the cost per serving of the remaining ingredients in the burger. Connect with him on LinkedIn. Calculating food cost percentage can be a bit challenging, but by using the formulas and resources above, you'll be on your way to successfully calculating and optimizing food cost percentage for your restaurant. Taking the extra step to calculate food cost percentage and cost of goods sold down to the individual cookie, slice of bread, or burger helps your restaurant in the long run. Your Plate Cost and Beyond For specific foods and quantities of foods in the Food Plans, see Thrifty Food Plan, 2006 (2007) and The Low-Cost, Moderate-Cost, and Liberal Food Plans, 2007 (2007). Food cost is the ratio of a restaurant’s cost of ingredients (food inventory) and the revenue that those ingredients generate when the menu items are sold (food sales). 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