By- Deagon B. Williams
Food cost percentage: Aack! The single most dreaded phrase in the restaurant business. Also the most confusing, mind-numbingly boring, and misunderstood one! So what the heck is it really? Your food cost percentage is simply the percentage of the sales price that it cost you to buy the food you just sold. So simple, and yet so frustrating to get right.
In my experience the biggest misconception about food cost percentage is that it needs to be lower. Always lower. Additionally, there is a common myth that 33% is the magic number. Neither of these are true!
Now that we have debunked those myths… here is the real secret to food cost percentage: consistency. An extremely low food cost one month guarantees an extremely high food cost the next month, which leads to cash flow fluctuations that can take a small business down before you know it. Steady moderate food costs, month after month, are what you want to achieve.
A consistently good food cost percentage is achieved in three ways. (1) Vendor management- check your invoices and the product at every single delivery. If you do this you will soon develop a keen eye for both quality and price and be able to adjust proactively. (2) Seasonality- shop in season. Food is cheaper at the peak of the season as well as far tastier. (3) Daily refrigerator management- rotate your stock daily. By doing this you will soon develop a sense of what is selling and what needs to be made into a special before it has to be thrown away.
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