# food cost question



## shoppe_girl (Mar 25, 2009)

i just took my first chef job writing my own menus and doing my own food costs. i've done this kind of work before but always with a chef above me. right now i'm looking at about 25% food cost. as in, it costs me 25% of what i'm charging for the menu. everything is turning out very well and i've next to no waste whatsoever. assuming i've done my math correctly, is this looking good for me? i talked to my boss at my other job about it and he seems to think i'm on track, i just wanted a few other opinions.

so.. good? bad? needing minor improvement?

some of the inventory i'm using is incredibly expensive (which pushed my costs a little higher than i wanted) but it was already in stock and needs to be used up so that i can phase the old stuff out and fix issues the restaurant has been having with through-the-roof food cost. 

i think i'm doing an okay job. what do you think??


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## ed buchanan (May 29, 2006)

25% food cost is excellent, in fact hard to believe unless you are in catering or banquet only. If I were you I would thoroughly go over all the figures and make sure.


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## pete (Oct 7, 2001)

I agree with Ed, 25% is excellent, maybe a bit too excellent. Not unheard of, but low enough that I would be double checking my numbers just to verify. Different types of restaurants and different types of foodservice will run different food costs, but a general rule of thumb is 30-33%. Catering and banquets tend to run lower and upscale steakhouses tend to run quite a bit higher.


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## unichef (Aug 14, 2000)

A lot of variables here. You need to know what your menu mix is going to be. Some items you will sell more of than others. Most important is to look at the gross profit contribution of each item. Too many chefs get caught up in the COS percentage. 

Let's say you have a pasta dish on your menu, you sell it for $10.95 and your cost to produce it is $2.50. So your food cost on that item is 22.84%.

You also have a steak and lobster on the menu at $40.00 that costs you $23.00 to make. Your food cost on that is 57.5%.

Which one would you rather sell? The steak and lobster, of course, because even though your COS is 57% you are putting $17.00 in your pocket for each one vs. only $8.45 profit on each pasta. 

The highest variable cost in a restaurant is labor. Sometimes you may want to take a hit on your food cost in a trade-off for saving labor. This is the reason you see so many more convenience products in restaurants now. 

Food costs is a science that cannot be summed up in a short newsgroup posting. The good thing is your are paying attention to it. You would not believe how many chefs do not and it ends up being their demise.


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## cheflayne (Aug 21, 2004)

Who is responsible for the budget? Who is responsible for the menu pricing? What is the budgeted food cost?


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## kuan (Jun 11, 2001)

25% food cost? Are you counting everything? For example did you include dinner rolls and fryer oil?

$5 vs $5.25 food cost for a $15 entree is huge.


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## greyeaglem (Apr 17, 2006)

It's my understanding that food cost and menu pricing are two different things, food cost being the total percentage of overall business expenses spent on food as opposed to the percent of the menu price. Am I missing something?


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## shroomgirl (Aug 11, 2000)

one of my friends has had a french provencal restaurant, actually two.....at one time he shared that his food costs were 13%. He makes the bread, desserts, soups from scratch....breaksdown lambs, chickens, beef clods, pigs...makes charcuterie, dressings.....

One of his favorite soups is a fish soup made with bones the fish monger gives him, fennel tops, onions, tomato paste, spices and I don't remember if he's got cream in it....used to sell it for $7+ a bowl. Gotta love it.

We once priced out breaking down 2 pigs and the return on the products he made from said pigs.....pigs and 12 hours labor was somewhere in the $800 range, return from pates, chops, hams, sausages, etc $4500. Pretty dang good reason to break down your own animals. He cryovacs, so doesn't have to worry about waste.

He now owns an Irish pub, an English pub and one French bistro. 
It's fun seeing how he goes about designing a menu. 
French place always has escargot, usually smelts, mussels, some charcuterie platter, at least 2-3 salads, a couple soups, typically 1/2 roasted chicken...etc....


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## furqi (Jun 19, 2009)

What is the best and accurate way of calculating food cost? and menu cost?


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## kuan (Jun 11, 2001)

Add up all your purchases for the week and subtract the value of your inventory. Divide that against your before tax sales using just those items you purchased.

So Purchases=$100
Inventory=$20

100-20=80

Sales=$200

Food cost 80/200=0.4 0r 40%.

To cost out your menu items just add up everything you used and divide against the cost of the menu item.

Ingredients=$2
Menu item=$5

2/5=0.4 or 40%

That said, for a small restaurant, it's good to remember that you don't take inventory to the bank.


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## kuan (Jun 11, 2001)

You're right. Menu cost vs. overall food cost always turns out different unless you specifically account for that 0.5oz of EVOO you use for sauteing. Stuff like that.

So I wonder if the general 33% rule of thumb is the food cost or menu costing figure. Hmm...


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## chefbillyb (Feb 8, 2009)

I don't think that most dinner houses have a 25% food cost unless they have a huge kitchen labor cost. If you have a huge kitchen labor cost then it needs to be compensate for someplace. I would think that most dinner houses would run a higher food cost of about 40%............I know if I ever ran a 25% food cost I would be employee of the month every month. If the food cost is that low the prices could be to high........If no ones complaining then go for it.....................Bill


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## even stephen (Oct 10, 2005)

I would have to say it all varies......42% to 44% in an upscale steakhouse....
I've run a 28% in an extremely upscale italian restaurant....but, all pastas and desserts were made in house and pasta accounted for a large percentage of sales...everything was utilized....fish scraps, meat scraps...all stocks and sauces made in house,etc,etc. As posted above.....convenience products vs.
labor......I am in a resort now and run a 37% at an upscale outlet, including all the freebies to sales department, and all the comps for any guests unhappy with there suites. Our Sushi Bar runs a 28%, and our Pool Bar Grill runs a 26%...You always have to throw in business levels as well. Almost nothing is pulled out of a freezer and cooked on the spot....we see a marked increase in spoilage during the slow season...problem is, your stuck with the need to offer diverse large menus year round....Kuan...how were inhouse and departmental food purchases handled when you worked in resorts? Was it a credit to cost of goods, or a straight charge to the respective department?


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## jimmyb. (Jan 25, 2006)

I agree with UniChef. Although, upper management and owners like to look at Food Costs, remember that you can't take percentages to the bank. You take money to the bank. So, look closely at contribution margin. Years ago, I worked for a restaurateur who got too hung up on food costs and was upset when a high-cost item was gaining popularity in the sales mix. I demostrated to him that even though the item (garlic-roast lobster) had a high food cost, its contribution was the highest on the entire menu. Because of the item's high sales volume we were taking more money to the bank than if we sold other menu items.

Are your FOH staff order takers, or sales people?


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## cstanford (Jul 3, 2008)

Hard to believe unless your customers are being fed the worst example of every ingredient that goes into an order and you can't do that very long and stay in bi'ness.

I'd double-check the math.


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## duckfat (Aug 7, 2008)

Is 25% based on actual sales Vs invoices or is this just the number you get when you cost out and average your menu? 
Your food cost % is determined at the end of the month after you do inventory and compare stock and purchases Vs sales.
If your boss just thinks you are on track at 25% what exactly is he/she expecting? I think I've had my food cost under 30% a few times but 33-35% is the norm. and that number has been a good bit higher in Clubs I have worked at and hotels that serve free breakfast or staff meal.


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## greyeaglem (Apr 17, 2006)

A rule of thumb (and it's just that as every restaurant is different) is breakfast should run between 20-25%, lunch between 30-35% and dinner around 40%. Then you start fudging things. For instance, a diner that serves a grilled cheese sandwich will have that item at about 10-15% food cost and a steak that's maybe 40% food cost because to price the steak where it should be on a percentage basis would put it at too high a price for a lunch item. Suppliers have recently been on the "you don't take percentages to the bank, you take $" bandwagon which is true, but they don't want you looking at your portion costs on things that are overpriced. The truth is a combination of both percentage markup and profit amount. If you have a very high volume facility, you could make a fortune on grilled cheeses. If you have a small place like the one I work at, you need to focus on the amount of $ profit on each item. I could fill the place up 3X per service and if I have low priced items, the total profit I can realize won't keep us in business very long. I only have so many seats, so we focus on items that will generate higher $ profits. Also, if you have inventory on hand that you need to get rid of, don't be afraid to let it go for less than you'd want. It isn't doing you any good sitting around and if you don't sell it, it's a loss. Better to try to get at least your cost back out of it. A profit would be nice, but a push is better than a loss. Now we're seeing resataurants running big discounts in order to get their volume up. Trouble with that plan is that their profit margin is so low they're not really gaining anything and they're paying it out on labor. Better to cut staff to adjust to slower traffic and keep your prices where they need to be. That's what we did. We ramped up the quality, charged what we needed to and the owner says this is the second best year he's had in 17 years of business.


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## gollihughj (Aug 18, 2008)

Food Cost and menu cost are very different beasts. The menu cost is pretty much theoretical. It is what the food cost would be if there were no other variables to influence it. It doesn't take into account labor cost or even overhead. It doesn't take into account that maybe your prep cook had an all nighter the night before so producing the normal items may have taken a bit longer today, which ups your labor cost and ultimately your food cost. 
If you have a low labor cost, you can afford to run your food cost a little higher. There are so many things that can influence your food cost that you just can't put it all into one reply on a thread. I suggest you do some heavy reading and studying in your spare time, you won't regret it! "The Menu and the Cycle of Cost Control" by is a great start. 
Don't be afraid to shop around with your suppliers either. Compare prices and let them know you're doing so! Saving a dollar here and there ads up over time. 
Be strict about portion control, this is another item that can influence your food cost, it's amazing how much food you give away that you don't realize. 
Hope this helps.


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