THE FOUR ASPECTS OF FOOD COST
Food cost has a direct impact on a restaurants’ operating profit. Because no two operations are identical, it is necessary to calculate the food cost of your particular restaurant monthly. Industry averages cannot be used as an accurate standard. The concept of food cost must be examined at several different levels in order to take into account any and all variables. For example, one variable is your menu sales mix. When one menu item sells better than another, there will be variances in your overall food cost and you should know how this affects your profits. Essentially, there are four aspects of food cost that must be individually calculated for each operation: * Maximum allowable food cost percentage * Actual food cost percentage calculated for the income statement * Potential food cost percentage – determined by the menu sales mix * Standard food cost percentage – includes a waste allowance Maximum allowable food cost The maximum allowable food cost figure determines...