Food Cost Formula:
The food cost formula calculates food costs to monitor and prevent expenses from rising.
To calculate the Actual Food Cost Percentage, multiply the following formula by 100:
Food Cost Formula = (beginning inventory + food purchases – ending inventory) / food sales
Pricing Dishes:
Proper menu pricing is crucial for a successful restaurant. Understanding food cost percentages helps to set suitable prices.
Good Food Cost Percentage:
A good food cost percentage is around 28% of total revenue, but it varies depending on the type of establishment.
Factors Affecting Food Cost:
Several factors influence food cost, excluding expenses like employee benefits and taxes.
Importance of Food Cost Percentage:
Food cost percentage is a significant indicator of a restaurant’s financial health, affecting profit margins and operational efficiency.
Profit Margin on Food:
The average restaurant profit margin usually falls between 3 – 5 percent.