Cost of goods sold can take some time to stay on top of but it is key in monitoring your overall costs.
Food cost percentages
The best way to calculate your actual food cost is to take your COGS divided by your food sales, multiplied by 100. This will you give you a result as a percentage.
- Food Cost Formula: (Cost of Goods Sold / Food Sales) x 100
A healthy food cost percentage is between 25 and 35 percent. If you are spending more on food, you may not be spending as much on labor or rent and it can all even out in the end. This will also greatly vary based on the type of product you sell.
Inventory tracking is important
Track your inventory at the same time for consistency. The beginning or end of the day is best. This will give you consistent numbers to compare inventory and food cost.
Tracking inventory control is the easiest way to reduce outages and waste. Inventory levels help you see what you need to order to maintain your current volume of business. Making sure that you have just enough product on hand is very important. Too much and you are throwing away good money. Too little and customers can get upset that you are out of their favorite product.
Work with Your Food Suppliers
Work with your suppliers to help lower food costs. They may be able to match pricing or suggest similar items for a lower cost. Additionally, offer to buy in bulk but have the order sent over multiple shipments.
Remember to look at all items you are buying and not just food as well. Can one supplier provide paper goods and food? That might be a different savings.
Portion control is key
You can spend all the time in the world negotiating the price of food and have it not matter. Your employees need to know specifically what portions to use. Scales, spoons and cups specifically for potions can be incredibly helpful. A ‘handful’ of cheese weighs a very different amount between employees.