Food Costing
Food costing is the process that calculates the food costs in a restaurant to illustrate profitability. A restaurant’s food costs are widely considered by many in the industry as the most important metric as it directly impacts the profitability of the restaurant. It’s the ratio of costs to sales represented as a percentage and typically a restaurant’s food costs will fall between 26% - 35%.
Food costing is simply calculated by using the formula of;
(The Ingredient Costs of a Dish ÷ Menu Price) X 100 = Food Cost %
This can be done manually or there is a wide range of food costing software available which allows you to enter all the ingredients of your dish into the software and it produces the food costing percentage for you. Most hotels require that chefs undertake food costing for every dish and generally this is the responsibility of the purchasing department.
So apart from undertaking food costing for a single dish, it’s essential to calculate the food costing for an entire month. This is the actual aggregated monthly food costs illustrated by this simple food costing formula;
(Total Ingredient Costs ÷ Food Revenue) X 100 = Monthly Food Cost %
Undertaking food costing is an essential part of running any restaurant or kitchen, but it isn’t as black and white as simply diving the costs by the revenue. Kitchen Profitability is a book about food costing and menu engineering as well using strategies to lower your over all food costs to ensure profitability. With so many restaurants closing these days it’s essential to understand the fundamentals of food costing.
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