Facts About The Restaurant Industry

One very important fact about the restaurant industry, is the fact that you absolutely need to keep consistent portion control. Ingredients are purchased in weight, count and volume. You will need to calculate the cost of all ingredients in a recipe. Total the costs and divide this by the food cost you want to charge for a menu item. This way you will have a price for your menu for this item.

In the restaurant industry, you will need to count all ingredients. As an example, a cheese burger with tomato, lettuce, and mustard on a wheat bun with a small bag of potato chips has a total cost of $2.10. If you want to get a 30% food cost for this item, you will need to divide $2.10 by 30 % (.30), which will give a menu price of $7.

Try to keep your food costs between 22 and 34%. If your food cost is 22%, it will mean you will be spending 22 cents of every dollar for food. This would leave you 88% of every dollar to cover labor and other expenses.

If you want to use the factoring method, you can multiply the cost of ingredients by three. This will only give you the cost of the menu item and not include other costs.

When you use gross margin pricing, the formula is profit minus the cost of goods sold divided by the net sales. For instance a gross profit margin of 33:1 means that for every sales dollar, you will have 33 cents to cover other expenses. This is the best for calculating a dish with a high ingredient cost in the restaurant industry.

The Prime Cost method works by adding the cost of labor and cost of food, then add a percentage for profit. This method is good in the restaurant industry for dishes that need a lot of preparation.

Competitive Pricing matches what other restaurants charge for the same product, with what you charge. Compare the prices by studying the menus, and price your product not much higher or lower than what others are charging.

The restaurant industry views combination pricing as a method that uses all methods- factoring, gross margin, prime costs, and competition. They try to balance prices of the competition with your costs and what you need to make.

ChefTec Software- will allow you to customize reports and print out inventory reports, recipes, make up ordering lists and analyze recipe and menu costs by portion.

PC-Food II- Is an inventory and marginal management system for use in all food service establishments. You can calculate and keep food costs down, and keep track of selling prices based on the margin you desire. You can generate displays and reports, export files. You can use already programmed recipes, or add your own recipes to the list and generate them whenever you want them. This and so much more is available on this software.

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