What is food cost calculator?
A food cost calculator is a tool used in the restaurant industry to calculate the cost of food items. They are also commonly referred to as a menu price or cost calculator. The food cost calculator is used by restaurant owners, consumers, and reviewers, as they help individuals compare prices at different establishments. To use a food cost calculator, you will have to enter various information about the establishment. It will then estimate the cost for several dishes for your desired quantity and type. With these calculators, you will understand what a particular menu item will cost before deciding whether or not it is worth it.
Using the Food Cost Calculator to Save Money At Your Restaurant
What is a Food Cost Calculator?
A food cost calculator is a tool you can use to estimate the amount of money you need to spend on groceries and other related items. It calculates according to your budget, the size of your family, income, and more. You can use it to determine how much profit you will make in your grocery store by comparing prices in different stores. The food cost calculator makes sure that your food budget does not exceed what you can spend. Food cost calculators help plan meals for the week and understand what foods will cost more.
In the restaurant business, it is crucial to learn to manage the cost of food. Whether you operate a full-service or a quick-service restaurant, you need to know the cost of food to keep your business running. Restaurant owners need to track their inventory and restaurant records. Restaurant owners need to control the costs of the food to boost profits.
What is Food Cost?
Food cost is the ratio of the cost of ingredients to the revenue earned from the sale of menu items prepared with these ingredients. Typically, the average food cost percentage is 28-32 percent of total food sales in a restaurant, with a maximum of 45 percent. Food cost helps in determining the price and assists in setting the tone and quality of a restaurant. It is an essential part of bookkeeping in a restaurant.
Note-: Food cost is the ratio of the cost of ingredients to the revenue earned from the sale of menu items prepared with these ingredients.
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What is the Importance of Calculating Food Cost?
Restaurant owners can help control the price of menu items accurately and increase profits by maintaining the food cost ratio. Plus, by keeping track of menu prices, restaurant owners can adjust to changing restaurant sales and maintain food costs accordingly.
Restaurant owners also need to learn to price a menu as profit margins are low in the restaurant business. It is crucial to stay on top of the cost game. You can control inventory shrinkage by using inventory management software, such as Zipinventory Restaurant owners can install inventory management software on their restaurant point of sale (POS) systems to manage and generate inventory reports effectively.
What is Ideal Food Cost and Actual Food Cost?
Ideal food cost percentage is calculated without factoring in inventory losses. On the other hand, actual cost calculation includes real inventory levels. When we calculate the actual cost percentage, we can see how much food waste is generated in a restaurant. When we consider shrinkage that occurs in every restaurant, the actual cost percentage has a higher percentage than the ideal cost percentage.
Ideal cost percentage is calculated to know the health of your business, as it is not an accurate measurement of cost. Ideal cost provides you with a target cost and helps you in tracking inventory, cutting food waste, and losses. When the gap between your ideal and actual food costs is low, the higher is your profitability.
How To Calculate Food Cost?
There is a lot to consider when running a restaurant. From labor costs to food costs, operating one can be a difficult process. Let's discuss the importance of understanding how food cost factors into the total cost of operation for your restaurant. With this knowledge, you can make decisions about how to optimize your business for maximum profitability.
Below is the Food Cost Formula-
Food Cost = (Beginning Inventory and Purchases-Ending Inventory) / Food Sales
Do You Know-: Ideal food cost percentage is calculated without factoring in inventory losses. On the other hand, actual cost calculation includes real inventory levels.
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Steps to Calculate Food Cost
When you are trying to figure out the cost of food in your restaurant, it can be hard to calculate what things should be included. This is especially true for those who are new to budgeting. So how do you figure out the cost of menu items? Read on and learn how to calculate your food costs using these steps.
1- Calculate Inventory Usage
First, calculate inventory usage to know your food cost. Inventory usage is the right quantity of goods used by a restaurant in a period. Here is the formula to calculate inventory usage-
Inventory Usage = Beginning Inventory + Inventory Purchases - Ending Inventory
Beginning inventory refers to the products available at the start of a period. Ending inventory is the remaining products at the end of the period.
2- Determine Total Food Sales
You can determine sales in your restaurant POS system. An inventory management software Zipinventory Features allows you to generate monthly, quarterly, or annual total sales reports. If you do not have aPOS system, you can calculate sales by product manually. You can calculate it by multiplying the number of products sold by the sale price. For example, you sold 35 plates of mac and cheese for $15 each.
35 (Plates Sold) x $15 (Sales Price) = $525 (Total Sales for Mac and Cheese)
You can calculate for all goods sold and add them all together to determine the total food sales for your restaurant. For example, assume the total sales for a month was $4000.
3- Apply Food Cost Formula
Apply the food cost formula to determine the cost using the values you calculated above. For example-
$1500 (Inventory Usage) $4000 (Food Sales) x 100 = 37.5 percent (Food Cost)
The food cost for your restaurant is 37.5 percent. The percentage represents an average of 37.5% of the sale price of a dish to prepare it.
What is Food Cost Percentage?
Food cost percentage is the total cost of producing a food product, including all costs associated with production, marketing, and distribution. Food cost percentage includes labor, raw materials, fuel, and other costs involved in food production. Inventory costs are included in the calculation of food cost percentage so that the total cost for each year can be calculated. Food cost percentages vary greatly depending on the type of food produced. For example, a company would need to spend about $7 for each chicken breast it sells to cover its food costs (additional expenses include transportation and packaging). On the other hand, if it was selling an ice cream cone for $1.00, it would only have to cover about 8% of its total cost to produce that product. It is crucial to know your current food cost percentage because it can help you make better decisions when purchasing inventory or running your business.
Food Cost Percentage Formula
Here is how to calculate food cost percentage-
Food Cost Percentage = (Beginning Inventory + Purchases - Ending Inventory) / Total Food Sales
You can calculate the food cost percentage by adding the beginning inventory and purchases and subtracting the ending inventory. Then divide the number into total food sales.
What is the Average Food Cost?
The average food cost in a restaurant depends on the recipe cost of a meal in a restaurant. The average food cost in a restaurant generally varies from 28 percent to 35 percent, with a higher limit of 45 percent. You can easily calculate food costs with the following steps-
You can begin by calculating your prime cost. You can determine the prime cost by adding costs of goods sold and the cost of labor for your restaurant. Divide the number by the total food sales to derive a prime cost percentage. Typically, the food cost percentage is less than 60 percent. Restaurant owners can adjust the food and labor costs to remain below 60 percent. If you are unable to meet the target, make sure to adjust your ingredient costs and portion sizes in your restaurant. Several restaurants are not able to make profits as their portion sizes are large, which adds to the portion cost of the food.
How to Calculate Recipe Cost?
To calculate the recipe cost, determine the total food cost per item purchased and divide by the cost of the recipe. For example, if you have purchased a five-pound pack of cheese for $10 and the recipe demands two pounds, this additional potion will cost $5. You can calculate for each ingredient used in the dish to derive portion cost.
Tips to Reduce Food Cost in Restaurant
You can reduce food waste in restaurants by comparing actual and ideal food costs. You can use a food cost percentage calculator to measure actual and ideal food costs. Below are some tips to reduce the cost of food and boost your bottom line.
1. Gradually increase the price of menu items
Increase the prices incrementally of the menu items, instead of increasing the prices quickly to prevent losses. Your customers will not mind smaller increases in the menu items. Restaurant owners can use this method for menu items with higher sale prices.
2. Cut Down on Food Waste
Restaurant owners can maintain a food waste log of all dishes that return to the kitchen to keep track of restaurant food costs. When a particular menu item returns to the kitchen with a large amount of leftover on the plate, make sure to adjust the portion sizes in the future. By preventing food waste, you manage food costs in the restaurant.
3. Watch Seasonal Price Fluctuations
Keep a watch on the seasonal prices of some ingredients as they may vary from season to season depending on their availability. Restaurant owners can adjust the prices and menu options according to seasonal ingredients available at competitive prices. When you see prices of a particular ingredient rising or a dish becoming less popular, adjust your menu and sell popular dishes to maintain profits.
4. Review Ingredients of Recipe
Make sure to analyze your recipes regularly. Restaurant owners can adjust high-cost dishes so they use less expensive ingredients and more easily available ones. Make sure to maintain the portion sizes. If you reduce the portion sizes too much you might risk upsetting customers. Try to include more dishes in your men that can be prepared with less expensive ingredients. You
5. Buy Smart
According to the USDA, food cost is likely to rise 23 percent every year. Make sure to buy your ingredients strategically. When you purchase the required amounts at the right prices, you reduce food waste and increasefood inventory turnover. Inventory management software, such as Zipinventory can help restaurant owners manage their inventory and increase profits.