The Recipe for Profit: How to Manage Food Cost Percentage in a New Restaurant
Launching a new restaurant is an exhilarating venture, but as any seasoned restaurateur will tell you, the devil is in the details—and the biggest devil of all is often food cost. Food cost percentage, a critical metric that measures how much of your revenue is spent on ingredients, can be the difference between a thriving business and one that shutters its doors. For a new restaurant, mastering this metric from day one is not just a good idea—it’s essential.
What is Food Cost Percentage?
At its core, food cost percentage is a simple calculation:
Food Cost Percentage=(Total Food SalesTotal Cost of Goods Sold (COGS))×100
- Total Cost of Goods Sold (COGS): This isn’t just what you bought in a given period. It’s the value of the ingredients you actually used. The formula is: Beginning Inventory + Purchases – Ending Inventory.
- Total Food Sales: The total revenue generated from selling your food items.
The ideal food cost percentage for most restaurants … READ MORE ...
