COGS

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ToddA
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2012/12/02 17:23:39 (permalink)

COGS

Where would you start looking for answers?  Or is my calculations off...
Weekly Beginning Inventory 7,000
Purchases              +   2,000
Ending Inventory  -   5000
Cost Of Goods = $4000.
So far so good...
Food Sales(pretax) $10,000
So food cost = 40%, right?
My problem is that every menu item is priced at or below 30%(averages about 27%).
27% food cost on $10000, is $2700, not $4000 as in my COGS.  So where did the $1300 go? 
Ideas:
* waste- That's ALOT of waste, I'm sure it's part of it, but not that much.  My waste sheets weigh in around $100/week
* theft- self explanatory, but $1300 worth of food is alot to steal.
* employee benefits- free meals.  But the are included in the sales already(just received as "discounts")
* Mis-categorized items- Is it customary to include toilet paper, cleaning supplies etc. in food cost?
My gut is telling me that's its a combination of all of the above, but any insight and opinions are welcome..
 
Todd
 
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    pnwchef
    Double Chili Cheeseburger
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    Re:COGS 2012/12/02 17:41:13 (permalink)
    First of all, Welcome to Roadfood. Your waste sheet says about $100 a week, that would bring it down to $900, thats $30 a day.................When I do inventory, I break out all paper items, from food, so I have two different percentages to deal with. I have worked in places that break out dairy, meat, produce, and so on. In your operation its easy to loose an extra $30 a day. When sales are higher, food cost is much easier to control..........I would break out paper, food and cleaning supplies. see how it works out for next month..............pnwc
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    Foodbme
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    Re:COGS 2012/12/02 18:03:25 (permalink)
    First Assumption - You're talking about one month and What you're calling inventory is just FOOD ITEMS including Condiments, excluding Non- food items. You need to keep a separate inventory of Non-food items.
    First your COGS  is Not necessarily COGS. It's your Net Inventory REDUCTION.
    Assuming zero inventory loss AND an accurate inventory count---
     You Sold $4000 of your inventory and charged Customers $10, 000 for it.
    Your Monthly Gross Profit, before other expenses, is $6000.
    Now you take a second ACCURATE Inventory of Non-food items.
    Lets say you started with $ 1000 in supplies - bought $200 worth, Ending inventory was $ 800. So, you used $400 in supplies.
    You subtract $400 from your Gross Profit of $6000 - You're now at $5600.
    Subtract all your other expenses Including hours and salary for your time  from that and if you recorded ALL your expenses accurately, you should arrive at a net profit or loss.
     
     
     
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    ToddA
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    Re:COGS 2012/12/02 19:14:06 (permalink)
    OH, those were weekly numbers(the waste), so $100 in waste only brings it down to $1200, (although I can see that number easily being closer to $30/day, like you hinted).
    Thanks for welcoming me, btw.. 
    I think my problem is that I am including everything from handsoap and toilet paper to cherries and limes for the bar.  I can see the argument for packaging and condiments, but nowhere in my recipe do I call for janitorial supplies..  That will make it alot closer. 
    post edited by ToddA - 2012/12/02 19:21:55
    #4
    ToddA
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    Re:COGS 2012/12/02 19:21:23 (permalink)
    ALL numbers are weekly numbers.. 
    And, you are right, I was including non-food items.  As you guys pointed out, I'll have to break out everything not on my recipes.
    "Lets say you started with $ 1000 in supplies - bought $200 worth, Ending inventory was $ 800. So, you used $400 in supplies.
    You subtract $400 from your Gross Profit of $6000 - You're now at $5600.
    Subtract all your other expenses Including hours and salary for your time  from that and if you recorded ALL your expenses accurately, you should arrive at a net profit or loss."
     
    Thanks!  Except that you thought I was using monthly totals, it all makes sense.  I was factoring in ALL purchases, and it was throwing my COG% way up.  I have dozens of other expenses, but they are all easily derived at from Quickbooks.  It was the COGS that I couldn't figure out why I couldn't get it below 40% when every item on the menu was at an average of 27%..  I have been doing weekly numbers to try to pinpoint my error.. 
     
    ToddA

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    ToddA
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    Re:COGS 2012/12/02 19:38:35 (permalink)
    Results
     
    So I backed out my non-food items, and my COGS went down over $1000.  Now if you add in waste and benefits, you guys found my 1300..
     
    Thanks for your help!
     
    Todd
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    RodBangkok
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    Re:COGS 2012/12/02 20:18:23 (permalink)
    Don't forget to calculate the yield from your purchase items.  If you start with a kilo of something how much did you get after topping, tailing, peeling, prep waste, etc.  This is very important if your buying raw meats, but portioning by cooked weight, your yields could be as low as 50% in some cases.
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    ToddA
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    Re:COGS 2012/12/02 20:24:23 (permalink)
    My approach to that is to apply the yield to my recipe.
    If my recipe calls for 3 slices of tomato, it automatically factors in that I'm only getting 80% of my tomatos and adjusts the cost accordingly, so it's not just the cost 3 slices of tomato, but a portion of the tops and bottoms(which go into the sauce :) .
    Do you normally break out your yields when determining your food cost %? 
    #8
    RodBangkok
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    Re:COGS 2012/12/02 20:41:30 (permalink)
    ToddA

    My approach to that is to apply the yield to my recipe.
    If my recipe calls for 3 slices of tomato, it automatically factors in that I'm only getting 80% of my tomatos and adjusts the cost accordingly, so it's not just the cost 3 slices of tomato, but a portion of the tops and bottoms(which go into the sauce :) .
    Do you normally break out your yields when determining your food cost %? 

    Yes, we have our yields set in the item detail for our software, the cost per unit measure is then calculated using that yield percentage.  There are some items such as stock that use these trimmings, so there is some cost adder to those, but its a pretty small variation in price when you consider the price of the item.  Unless of coarse your talking about truffles or such.  It gets important to use yields carefully on higher cost items, you may want then to have two different items with the same ingredient, say carrots fine prepped with a higher cost as the yield is lower and the labor is higher, versus carrots stock prep which are less labor intensive and have a higher yield.  A big one also can be cheese, with the price of dairy these days you need to sharpen your pencil, especially for cheeses in wax coatings or heavy rinds.  The useable yield may be a lot lower, even though you may use the rinds in stock.
    #9
    ToddA
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    Re:COGS 2012/12/02 20:58:56 (permalink)


      A big one also can be cheese, with the price of dairy these days you need to sharpen your pencil, especially for cheeses in wax coatings or heavy rinds. 

     
    Argh, yeah, tell me about it.. LOL..
    #10
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