Posted by hans on August 23, 1998 at 15:06:51:
In Reply to: food cost percentage posted by greg scott on August 23, 1998 at 10:53:56:
: I seem to having a raging debate with our owner.
: I say food cost is a percentage of total sales,she says it is a percentage of food sales.Who's right?
: We are a very upscale fine dining country inn,food cost as a percentage of total sales hovers around 37 percent.Obviously as a percentage of food sales it is much higher.Am i just kidding myself or is our cost where it should be?
: I would be interested to hear what kind of cost other chefs are running.I always thought in fine dining food cost was usually around 41-45%.
: Any help would be most appreciated.
: chefgregory@hotmail.com
: Thanx
Chef Gregory,
cost is a $ amount expressed as percentage in relation to sales.
Therefor, Food Cost is a percentage of Food Sales. Nothing else.
As a useful figure, it only matters if a theoretical base has been established through proper means.
Bottomline matters in business. Not percentage of costs versus sales. In a business, the amount of money that is left in the cash register, after all other obligations have been paid is what is most important. If your kitchen is not looked upon as a profit-generating center, but as a means to attract business to other profit-centers of the operation, then a food cost of 200% could be reasonable from the operators' point of view. It all depends. In my experience however, any figure of net food cost above 32% is not cutting the mustard, type of operation notwithstanding.
Establishing sales price through standardized recipes, accurate portion sizes, average cost of goods throughout a given time-period, waste, etc.
Obviously, it can also be established arbitrarily, and often is. Then, empirical data of previous years is important to establish the bottom line.
Foodcost as a figure is useless as such and cannot be relied upon to gauge the financial profit or loss (P&L) of an operation. In larger operations, it is easily manipulated by shifting costs around profit centers.
If an operation is professionally run, costs will be controlled on a daily basis, with accurate tracking of sales versus purchases but averaged over month for meaningful comparison.
My advice to you if you value your position, pay attention to your employers wants and needs. It is their business and they have to pay the bills. It is your business to contribute to the bottomline.
Sincerely,
HWK, CMC, Staatlich Geprüfter Küchenmeister (no period and not A.C.F. affiliated)