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 Food Cost?

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RedGreene

  • Total Posts: 37
  • Joined: 1/4/2005
  • Location: Redgreene Town, OH
Food Cost? Fri, 04/15/05 6:20 AM (permalink)
When calculating food costs, does every item sold have to be under 30%(if 30% is what I'm shooting for) or just the average overall cost? For example, if my hamburgers run at 25%, can my ice cream run a little higher than 30%?

Thanks for the advice.
 
#1
    lleechef

    • Total Posts: 6228
    • Joined: 3/22/2003
    • Location: Gahanna, OH
    RE: Food Cost? Fri, 04/15/05 1:03 PM (permalink)
    You want your OVERALL cost to be around 30%. Some items will be under and some over but when you do your end of the month inventory you will know exactly what your food cost is. Be precise when doing inventory....weigh every piece of meat and cheese, count all those ketchup bottles.....it's a pain in the you-know-what but it's the only way you'll get accurate numbers.
     
    #2
      Adjudicator

      • Total Posts: 5057
      • Joined: 5/20/2003
      • Location: Tallahassee, FL
      RE: Food Cost? Sat, 04/16/05 9:52 AM (permalink)
      quote:
      Originally posted by lleechef

      You want your OVERALL cost to be around 30%. Some items will be under and some over but when you do your end of the month inventory you will know exactly what your food cost is. Be precise when doing inventory....weigh every piece of meat and cheese, count all those ketchup bottles.....it's a pain in the you-know-what but it's the only way you'll get accurate numbers.


      In my restaurant (managment) years, indeed to be aound 30% on food costs was the norm. It is (was) a pain in the you know what to inventory everything (weekly), but that was the only way I could stay on top of things. A perhaps far more difficult item to keep under control in MY situation was labor costs.
       
      #3
        Stephen Rushmore Jr.

        RE: Food Cost? Sat, 04/16/05 3:56 PM (permalink)
        Hmm, this is interesting. Having never owned a restaurant, but having a degree from a Hotel School, I was taught that Food costs should be around 36% and Beverage Costs around 27%. This was 10 years ago, so perhaps changing times have impacted the costs required to be profitable.
         
        #4
          lleechef

          • Total Posts: 6228
          • Joined: 3/22/2003
          • Location: Gahanna, OH
          RE: Food Cost? Sat, 04/16/05 6:15 PM (permalink)
          The restaurant industry has chiseled those numbers down quite a bit. Ideal food cost used to be 33% and beverage 25%. Now the owners have started giving bonuses depending on your food and labor costs. Which means you work more hours, send employees home early on not-so-busy nights and frequently look in the trash cans to see what they're throwing away! At my last restaurant I ran a 31% food cost and that's pretty good for fine dining without skimping on portions or buying lesser quality items.
           
          #5
            UncleVic

            • Total Posts: 6025
            • Joined: 10/14/2003
            • Location: West Palm Beach, FL
            • Roadfood Insider
            RE: Food Cost? Sat, 04/16/05 8:33 PM (permalink)
            I was taught 30%, that being about 15 years ago... (But those are the folks that started gray hairs in my goatee)...
             
            #6
              Scallion1

              • Total Posts: 418
              • Joined: 7/20/2004
              • Location: Yonkers, NY
              RE: Food Cost? Mon, 04/18/05 12:30 PM (permalink)
              Sorry, long night tasting Barolos. Posted this as a new topic rather than a reply. Anyway:

              It's not that cut-and-dried. You have to look at the whole picture. A busy steakhouse serving prime beef might easily run a food cost in the high 30s. But that might not be so bad, because they probably sell a lot of booze, and, more importantly, their labor cost might be miniscule. An upscale place serving small portions at high prices might have a relatively low food cost, but might need a big brigade of highly-paid cooks to produce the menu.

              If I owned a restaurant which was running a bev cost in the mid 20s I'd be in there with a cleaver looking for someone's head. I think that anything over 20% is out of line, and 17% should be a reasonable goal.
               
              #7
                Scallion1

                • Total Posts: 418
                • Joined: 7/20/2004
                • Location: Yonkers, NY
                RE: Food Cost? Mon, 04/18/05 12:34 PM (permalink)
                Llee,
                Send employees home early on slow nights? I've done this with tipped employees, where it doesn't make much difference to either of us, but that's not gonna save much money. Salaried employees? That would only happen once, in my experience. And I don't believe that it's fair.

                Employees who work for salary, be it weekly or hourly, have an expectation of how much they'll have in hand on payday, and cutting that just isn't right. I know that when I was an employee that I'd have cleaned out my locker at that point.
                 
                #8
                  lleechef

                  • Total Posts: 6228
                  • Joined: 3/22/2003
                  • Location: Gahanna, OH
                  RE: Food Cost? Mon, 04/18/05 12:47 PM (permalink)
                  Scallion1, I was referring to hourly employees and I always asked for a volunteer and believe me, there was always someone that didn't mind going home early, putting the feet up and having a cold one before the rest of us who had to close!!
                  As far as salaried employees go, only my sous chefs were on salary and after a grueling week we would suddenly hit a slow day and I'd say, "Go home early". They get the same pay anyway.........they're on salary.
                  All the cooks and sous chefs were happy with this arrangement and nobody cleaned out their lockers because of it!
                   
                  #9
                    Scallion1

                    • Total Posts: 418
                    • Joined: 7/20/2004
                    • Location: Yonkers, NY
                    RE: Food Cost? Mon, 04/18/05 12:54 PM (permalink)
                    Llee,
                    All well and good, and I've always been in favor of cutting deserving people a break. But you introduced the idea of sending folks home early in the context of saving money, no? So it doesn't seem like it applies as you explain it, that's all.

                    I think if you were to speak with a cpa specializing in food service he'd tell you that for his purposes, at least, labor cost is pretty much a fixed expense in the short run.

                    BTW, you're in Anchorage? Is there still a joint (joints?) called Grizzlyburgers up there?

                    Best,
                    Bill
                     
                    #10
                      lleechef

                      • Total Posts: 6228
                      • Joined: 3/22/2003
                      • Location: Gahanna, OH
                      RE: Food Cost? Mon, 04/18/05 1:50 PM (permalink)
                      The labor cost thing is always an ongoing issue. My cooks were paid $18-$20 per hour so if I sent one home at 6PM I gained 6 hours of labor cost. You are right, in the short run it's not much but in the long run it does tend to add up as you are trying to chisel away at those numbers.

                      I've been in Anchorage for 5 years and never heard of Grizzlyburgers. Sorry. If it was here, I'd know about it! Sounds like a place we would frequent!
                       
                      #11
                        1bbqboy

                        • Total Posts: 4542
                        • Joined: 11/20/2000
                        • Location: Rogue Valley
                        RE: Food Cost? Mon, 04/18/05 2:32 PM (permalink)
                        A question from a non-insider: I've been told of owners, at least around here, cheapening ingredients as they expand and get more successful. Is there a tipping point at which consumers notice these things? As a patron, I always want to go to the freshest, most local, (hey, I'm a roadfooder), place but how do you guys balance quality Vs. cost?
                        I tend towards Tabasco, half and half and butter places. If they have honey for my coffee, they have a customer for life. Am I the exception?
                         
                        #12
                          Scallion1

                          • Total Posts: 418
                          • Joined: 7/20/2004
                          • Location: Yonkers, NY
                          RE: Food Cost? Mon, 04/18/05 6:48 PM (permalink)
                          Is there a tipping point at which consumers notice these things?

                          yup. that tipping point is the first time they notice a change, which they automatically, and correctly, assume is for the worst. the wooosh you here is them heading out the door. for the last time.

                          this isn't to say that good buying practices and wise use of material are bad in and of themselves. but cheating is cheating. only way it works is if you start with bad products (like the old deli guy i knew who never squeezed the water out of his tuna, but added enough breadcrumbs {gotta do something with the unsold bread, right?} to sop it up so it wouldn't dilute the cheap mayo he used. but he did that from day one) and find a customer base for the result.
                           
                          #13
                            dreamzpainter

                            • Total Posts: 1609
                            • Joined: 2/6/2005
                            • Location: jacksonville, FL
                            RE: Food Cost? Wed, 04/20/05 10:02 AM (permalink)
                            "Is there a tipping point at which consumers notice these things?" The sandwich shop my wife manages is one of four in a small local family run chain. The brother and sister each oversee 2 stores. A couple yrs ago the sister in an attempt to increase profits reduced the amount of meat by 2oz and went from one slice of cheese to 2/3's a slice per sandwich and in an attempt to disguise it used a smaller roll... The result?? Customers voted with their feet and profits nosedived, many long term customers calling/visiting the main store and complaining to the patriarch (dragon lady)who quickly reversed her daughters decisions and took back one of the stores...
                             
                            #14
                              Michael Beam

                              • Total Posts: 8
                              • Joined: 4/11/2005
                              • Location: Rochester, NY
                              RE: Food Cost? Wed, 04/20/05 1:30 PM (permalink)
                              Managing food and beverage cost is more art than science. There are lots of basic assumptions people make about what are acceptable cost levels for food and beverage costs. I wanted to chime in and say that there are no easy answers. Food and beverage cost should depend on the concept you are dealing with and stop there... So much depends on the menu make-up, restaurnat location, competition, etc. There are no easy answers.

                              Scallion 1 said that he would take a cleaver to someone on his staff if he was running a beverage cost over 20%... I will tell youthat it is shortsighted to think in absolute terms. An example may make my point. If you run a dollar longneck beer night (roughly 48% cost), but drive a bunch of traffic into your place, you might actually make more profit dollars than if you had sold every beer at $2.50 but did not generate a lot of traffic.

                              In a nutshell, what I am saying is that it is not so simple. If you tell me what is on your menu, what the competition is doing, menu mix, where you are located, who your suppliers are, etc. we could arrive at a good number for your business. Only a comprehensive analysis including all these factors (and others) can help you arrive at a food cost number that will ultimately make you the most profitable.

                              As my old manager used to say... " you take dollars to the bank, not percentages". Overall proft is key, not food or beverage cost. Only by looking at your whole operation can you make decisions that will make you more profitable, regardless of what product cost you run.
                               
                              #15
                                Scallion1

                                • Total Posts: 418
                                • Joined: 7/20/2004
                                • Location: Yonkers, NY
                                RE: Food Cost? Wed, 04/20/05 9:05 PM (permalink)
                                Right. Absolutely. But I assume you wouldn't recommend running a dollar longneck as a regular menu item. No matter how much business you drive into your place, if the numbers at the end of the month, or quarter, or year, are off, they're off. Sure. Suppose I increase sales of tallboys by, let's say, 300 bottles a night. I'm not making anything like as much as I should on the beer, and I'm drawing drinkers away from PROFITABLE items, like draft beer.
                                No one with half a brain would say that it's simple. Even I wouldn't, and I don't even have half a brain left. And I'd be the very very last one to stick up for the pencil pushers. But I'm here to tell you that if, at the end of the day, you've got a bar or restaurant with a 30% beverage cost, you won't have to do those calculations much longer.
                                Sure, there are variable, as I tried to point out. There's a labor/foodcost balance that can go either way without affecting profitability. And there are intangibles. And you can do wonders by getting folks to order your signature appetizer which adds six bucks to every check at a 10% food cost (anyone want a Bloomin' Onion?). But in the long run, you can't beat the numbers.
                                Your food cost and bev cost are, substantially, the ONLY variable costs in the joint. When they go up, profit goes down. And increasing the amount of unprofitable business just opens your veins a little faster.
                                 
                                #16
                                  bassrocker4u2

                                  • Total Posts: 534
                                  • Joined: 11/12/2003
                                  • Location: new holland, PA
                                  RE: Food Cost? Wed, 05/18/05 8:21 AM (permalink)
                                  its all part of the original business plan, or should be. my place is projected at 40 percent food cost on the high end. as business grows, food cost goes down. amazing! however, the plan i created generates excellent profit even at 40 percent food cst. the key is higher sales, period. its a whole different world when talking corporate. i agree with the cutting of hourly employees when slow. however, servers are different. some corporates now give their shift managers a target man-hours and a running tally on the office computer. each shift manager is responsible for keeping man-hours under budget, which is determined by guest count. usually 6-9 guest = one man hour depending on the operation. man hours are then converted into dollars at the end of each business day using the store average. interesting, and very accurate. there are tons of little things to do to control food cost, and labor.
                                  with the long neck situation, on one hand you will bring in drinkers that may have otherwise gone next door or down the street. on the other hand, you are decreasing the revenue from regulars. so it is up to you to calculate wether the lost revenue is generating new customers. i suggest putting the lost revenues in the advertising budget to control how much of it you can afford. its a long term increase you will gain from this special. one new customer is how valuable? get them in with the long necks, keep them in with the food, atmosphere, and friendship!
                                   
                                  #17
                                    rhg23

                                    • Total Posts: 2
                                    • Joined: 1/31/2006
                                    • Location: jacksonville, FL
                                    RE: Food Cost? Tue, 01/31/06 11:39 PM (permalink)
                                    I agree with everyone's understanding of food costs and labor. I work for a francise that uses a certain store's numbers versus the market's numbers. there are 5 stores in our market and the food cost numbers are broken into catagories. Our D.O. sends out CWS that shows each stores numbers and an average of the market numbers. If a store is the same or higher than the market average it is too high. The problem that I am having is if my store is only generating $32,000 in sales versus a store in Ocala which generates $60,000 in sales. How am I able to have numbers lower (food cost) with a great deal less in sales.

                                    Oh by the way, my D.O. does not beleive in any growth in inventory numbers. If an item is miscounted one week, I can not have a bounce back week to recover.
                                     
                                    #18
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