A Visual Lesson on How to Calculate Your Restaurant Food Cost
How to calculate restaurant food cost is one of the most frequently searched terms on YouTube. I even have several videos on my channel this topic. So why am I doing yet another video on food cost? Because you, my faithful followers, have been asking me to teach it using visual examples. This video is your visual lesson on how to calculate restaurant food cost.
For the best results with this lesson, I encourage you click on the video and watch me take you through a series of numbers on a simple Google Sheet.
The Google Sheet shows you the calculation based on a week’s numbers. In a perfect world you are going to be calculating your food cost on a weekly basis. These days with software it makes it too easy to take inventory. I work with restaurant owners who have $2 million restaurants who take inventory in under an hour and they know their food cost right away. Doing this weekly also ensures when you have a problem, you discover it in one week rather than let that problem go on for a month or even longer.
Myth about how to calculate your food cost
A lot of people say to me, “David, I've been in this restaurant business a long time, and I was taught that you don't order product at the end of the week or the end of the month because it'll make your food costs go high.” That is a myth. You’ll be able to tell from the video best, but if you’re using your inventory in the right place in the calculation, you’ll see that the food cost formula accounts for the new inventory without increasing your food cost.
Use this formula to calculate your food cost
Beginning inventory plus purchases minus ending gives us use, divided by sales gives our food cost percentage.
To calculate your food cost as accurately as possible, it's important to work towards putting inventories in place. There's a food costing software that I recommend to all my members and that's Margin Edge. Click the link to request a demo. I don’t have any affiliation to Margin Edge and do not receive any compensation if you were to purchase it. Instead, that link makes sure you get a demo with Bruce, a 30-plus-years veteran of the restaurant business he knows his stuff. He'll take care of you, and he'll give you a white glove service.
Be sure to visit my YouTube channel for more helpful restaurant management video tips.
