Webinar/Podcast
Ideal Cost - How to Know What Your Food Cost Should Be
If you're like many operators, you may feel like you've already cut costs to the bone. You've shopped for the best deals, raised your menu prices and cut your portions; still, you're left scratching your head as to why your food cost is still high.
In this webinar, we'll show you how to establish your realistic target food cost - what we call your "Ideal Food Cost". Ideal food cost (often called theoretical cost) is the cost expected for a given sales mix over a period of time, assuming proper portioning and normal waste and yields.
The ideal food cost for your restaurant is the REAL food cost percentage your team SHOULD be hitting.
What You Will Learn:
- Why many operators just can't hit their ideal cost
- Why ideal cost is unique to each restaurant and no two restaurants are the same
- How to use the item cost feature in your POS system to track ideal cost daily
- Step by step instructions for setting up an ideal food cost system
- How to use the free download resources on RestaurantOwner.com to reduce your food cost
About the Presenter:
Joe Erickson
Joe Erickson is the Chief Operations Officer and a partner in RestaurantOwner.com. He has owned and/or managed several restaurant/catering operations. He started his career by developing Luther's Catering, a division of the Luther's BBQ chain, in Houston. He was also a partner and co-founder of Sunset Dinner Cruises and was the founding partner of Bobby Mac's, a casual, full service restaurant in Kerrville. He later helped to develop a southwestern bistro, Nicole's Cafe San Felipe, and was managing partner for the original Truluck's Steak and Stone Crab, which now has 11 locations throughout the U.S. Joe is focused primarily on developing easy-to-implement, yet highly effective systems and processes to help our members improve their restaurants' efficiency, product utilization and most importantly, deliver a more consistent guest experience.
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Related Resources:
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Download
Ideal Cost Worksheet
This spreadsheet calculates the ideal (theoretical) cost of sales based on the cost of menu items multiplied by each item's sales mix for a given period. It can be used to compare your actual and ideal cost of sales to determine whether a cost problem exists.
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Download
Weekly Prime Cost Worksheet — with Discounts and Comps Tracking (Food & Alcohol)
Calculating prime cost every week is one of the profitable activities any restaurant can do. If prime cost is too high it's VERY difficult for any restaurant to generate a profit. Our weekly prime cost worksheets make it easy to track and control your biggest and most volatile costs.
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Download
Inventory Count Sheet
This Excel spreadsheet contains two worksheets, one for calculating food inventory and the other for bar inventory. The food inventory in broken down into categories for Meat, Seafood, Poultry, Produce, Bakery, Grocery and Non-Alcoholic Beverages. The bar inventory worksheet has categories for Liquor, Beer, Wine and Bar Consumable products. Each item on the worksheets has columns to indicate the ...
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Download
Menu & Recipe Cost Spreadsheet Template
Knowing what each of your menu items costs to prepare is one of the most basic yet overlooked aspects of running a profitable restaurant. This comprehensive spreadsheet template will give you an easy-to-use tool to calculate and maintain the current cost of your menu and recipes.
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Online Course
How to Setup and Use the Weekly Prime Cost Template
The Weekly Prime Cost Template is a series of integrated worksheets designed to generate one of the most valuable weekly reports in any foodservice operation -- the Weekly Prime Cost report. This course will lead you step-by-step through the process of setting up the template and using it. How to Setup and Use the Weekly Prime Cost Template. Weekly Prime Costs Template.
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Online Course
How to Format & Read a Restaurant P&L
What Every Owner & Manager Should Know About a Restaurant P&L. There is a big difference between running a restaurant and building a profitable business. This program will give you and your managers practical, common-sense guidance in managing the financial side of your restaurant by maximizing the value and use of the information contained in the P&L. In this course, you'll learn practical insights ...
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Online Course
Menu Costing Basics
Knowing what each of your menu items costs to prepare is one of the most basic yet overlooked aspects of running a profitable restaurant. Costing out your menu can be an arduous task, but you must know your menu cost before you can make intelligent decisions on cost-cutting, price increases or other changes to your menu. This course teaches managers and owners how to implement a menu costing system ...
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Online Course
Key Item Running Inventory
Key Item Running Inventory Control is one of the most effective systems for controlling food cost in any type of restaurant. That's because it's highly likely that 60-70% or more of your total food cost is attributable to just 10-15 key products. This course is for owners, managers, and key kitchen personnel to learn how to implement daily key item inventory tracking in their restaurants. We'll guide ...
Attendee Answers
| 1. What is your food cost? | ||||
|---|---|---|---|---|
| 21%, Prime Cost for us is 54% | ||||
| 25%-28%, franchise average is 26% | ||||
| 27% to stay at 58% Prime Cost | ||||
| 28% last year up to 32% this year | ||||
| 28%, we have achieved it previously | ||||
| 30% based on target GPM% | ||||
| 30% to be most profitable | ||||
| 35% | ||||
| 36% | ||||
| Our food cost should be 30%, but it's 37% and we need to figure out why | ||||
| Over 40%, trying to reduce it to 30%-25% | ||||
| Theoretical is at 28%, actual is running 35% to 36% based on our menu pricing based on our market. Labor averages 29%. | ||||
| We aim for 30-32%. We have worked so hard lately to menu cost. We started at near 40%. | ||||
| We calculated our costs based on purchase prices and food waste % | ||||
| We have multiple locations and one central kitchen which distributes. Overall food cost is around 35% | ||||
| We hit 30% on labor so we want to hit 60% prime cost. | ||||
| We need a set target | ||||
| We're trying to get down to 32%, currently at 37 as well | ||||
| 2. Does your manager or chef ever complain they can't hit the target you set? | ||||
|---|---|---|---|---|
| No - 20% of responses | ||||
| Yes - 80% of responses | ||||
| 3. How often do you update your menu cost? | ||||
|---|---|---|---|---|
| Monthly - 2 responses | ||||
| Twice per year - 3 responses | ||||
| Once per year - 6 responses | ||||
| When new menu items are added - 5 responses | ||||
| Never - 2 responses | ||||
Show Other Responses
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| 2 - 3 times per year |
| 3 - 4 times per year |
| Every quarter |
| Haven't updated for almost a year |
| I use ChefTech so every week I enter my invoices and it changes my menu price |
| If cost is in POS, when I imput purchases, it adjusts food cost in system automatically |
| Last time was about 18 months ago |
| Monthly, for inventory count only |
| Once in 5 years at this time, but need to change |
| Right after our remodel a year ago |
| Seasonal, so twice a season |
| Trying to check quarterly |
| We're starting to build it, to understand sales mix |
| 4. Does your POS system track individual menu item sales or costs? | ||||
|---|---|---|---|---|
| POS does track individual menu item sales - 87% | ||||
| POS does track individual menu item costs - 53% | ||||
| 5. Are you currently preparing a Weekly Prime Cost report? | ||||
|---|---|---|---|---|
| Yes - 43% | ||||
| No - 57% | ||||
| 6. If you complete a Weekly Prime Cost report, do you count and calculate inventory values? | ||||
|---|---|---|---|---|
| Yes - 55% | ||||
| No - 45% | ||||
