How to Calculate Food Cost Percentage?

Owning a restaurant is a dream come true for several people. Make sure you know how much you’re paying for food and you’ll see run it more efficiently.

What Is Food Cost Percentage?

One of the single most important things that you’ll need to pay for in your business is food. Food forms the foundation of the entire operation. This is what customers are looking for when they come to your restaurant. They want good quality food they can enjoy. No matter what kind of restaurant you are running, there’s one thing you’ll need to bear in mind at all times: how much you are paying for food.

Food cost is a simple ratio. This is what you are paying for the cost of the food you serve or what is known as food inventory. The amount of money the ingredients you’re serving to your customers is known as your food sales. In general, the food inventory cost is where you discover how much you’re paying for food and how much profit you can generate once the food is served.

Why Is Food Cost Percentage Important?

As those at Capital.com remind their clients, it is important to be mindful of the cost of food at your restaurant. That’s where a food cost calculator from a place like Lightspeed can be super handy. Every single restaurant should know precisely how much they are spending on the food that comes in.

The cost of ingredients varies. Some ingredients are more valuable. Any restaurant owner should know what ingredients they are using in each dish. That includes everything from the main protein to the costs of any seasoning. For example, if you are serving a cheeseburger, you’ll want to know the cost of the meat, cheese, toppings like lettuce, the bun you’re using, and the cost of the condiments.

As you see exactly what you are spending, you can find ways to reduce your overall costs for every single ingredient. That will aid you to run the business more easily. It will also lead to decreased food costs. You can see where you might save money on a specific ingredient. You can also see the costs of adding a new item to your menu.

How to Calculate Food Cost Percentage?

In order to calculate your food costs, you need to know your start value for all ingredients each week as well as the dollar value of the inventory and how much is left over once you’re finished with the workweek. You also need to know your total food costs for the entire week. Divide the total food costs into the total food sales. That will give you how much you’re spending on the cost of food when you are operating your restaurant. Once you know this important number, you can understand the potential for profit and how to increase it over time.

When you have the right facts on hand each week, it’s easier than ever to have a truly successful restaurant.