Another important factor in the successful management of your restaurant is the various existing ratios such as labor cost, hourly productivity, chair occupancy rate… Today, we’re going to look at what’s known as “food-cost”, the cost of food. It is a key element of your company’s success. The purpose of this ratio is to indicate the cost of your future recipe. Constantly fluctuating food prices make it difficult to control and maintain a constant price. Let’s see why your “food-cost” is so important.
The percentage of this ratio may vary according to the type of restaurant concept. You won’t be able to apply the same ratio to a fast-food, gourmet, café, bistro or other restaurant concept. It’s important to establish the “food cost” ratio according to the concept you’re managing. This can vary from 20% to 30% of sales, and a little more in the case of a high-end gastronomy concept. First, I recommend you calculate your “food-cost” per plate. Then, to monitor the ratio, you can carry out regular checks. This can be done on a daily, weekly or monthly basis. I advise you not to go beyond the monthly aspect of the audit. It’s much easier to spot errors early on, and to rectify the situation if the need arises. Establishing your “food-cost” means establishing the price of each category of food used in the recipe, and defining the exact grammage so as to be able to calculate the price versus the grammage required. At the end of the exercise, you’ll have the cost price of your recipe. At this point, you apply the chosen percentage to establish the selling price. After all, your “food-cost” is intended to establish your selling price. This is a crucial step in the management of your restaurant. The manager and the chef work closely together to establish the best possible profitability for your restaurant.
Once you’ve set up all your recipes, you can create your own recipe book. A recipe book that will help you manage your business and increase its value if one day you decide to sell it.
The food-cost ratio you have set indicates the line you must not cross. For example, if you have set a ratio of 30% and when you check it, it reaches 32%, you already have a management problem. What are the possible causes? In the first phase, this may be due to poor food production and preparation. Secondly, there may be feedback from the customer, such as a cooking problem. A possible ordering error during service. From a failed recipe to the trash can. All these factors contribute to increasing your “food-cost”. The other important point is theft. Yes, unfortunately, theft is common in our business, which is why it’s so important to have good inventory management. It’s worth noting that a difference of just 2% can represent several thousand dollars, depending on the volume of sales you generate.
It’s important for good restaurant management to be able to set standards, and your ” food-cost ” is the first step.