The views of this article are the perspective of the author and may not be reflective of Confessions of the Professions.
Every restaurateur knows that the restaurant industry is tough. In fact, don’t even make it past the first year. By taking steps to better understand the formulas associated restaurant food costs, you can significantly increase your chances of achieving profitability.
Food cost control has a direct relationship with the profitability of your restaurant. Higher than ideal food costs make it hard for you to make enough profit per dish to have money left over for marketing, staff, and other expenses.
Food costs are generally measured as a percentage. This percentage is calculated using inventory, purchases, and food sales, and is then compared to your ideal food cost, which is calculated by dividing your recipe cost by your sale price. The difference in these numbers shows you if your restaurant is achieving desired profitability.
If this sounds complicated, don’t worry, you’re not alone. 52% of restaurant owners cite managing food costs as one of the most challenging aspects of running a restaurant.
To help simplify this problem, this infographic goes over the steps involved in calculating your food cost percentage – the percentage of your revenue associated with ingredient costs – and how to effectively use it to achieve profitability.