How to Calculate Food Cost for Resturants
- Determine the food cost period: Decide on the time period for which you want to calculate the food cost, such as a week, month, or quarter.
- Gather necessary information: Collect all invoices and receipts for the ingredients used during the period. Also, take inventory of the ingredients you currently have in stock.
- Calculate the total food purchases: Add up the cost of all ingredients purchased during the period, including taxes and delivery charges.
- Determine the cost of ingredients used: Subtract the value of the inventory at the end of the period from the sum of the value of the inventory at the beginning of the period and the total food purchases made during the period. The resulting figure will give you the cost of ingredients used during the period.
- Calculate the food cost percentage: Divide the cost of ingredients used during the period by the total revenue generated during the same period. Multiply the resulting figure by 100 to get the food cost percentage.
For example, if the cost of ingredients used during a month is Rs. 50,000 and the revenue generated during the same month is Rs. 1,00,000, the food cost percentage would be:
Food cost percentage = (Cost of ingredients used / Total revenue) x 100
= (50,000 / 1,00,000) x 100
= 50%
In this example, the food cost percentage is 50%, meaning that 50% of the restaurant’s revenue is spent on the cost of ingredients.
EZTrolley’s smart POS can help calculate food cost periodically, and help restaurant owners identify areas where costs can be reduced and ensure that the business is profitable.
