Do You Know What Your True Food Costs Are?
23 Min Watch By Creighton Wong
Small percentages lost on food margins can lead to large amounts of lost revenue.
Why does this matter to you? Because with margins for restaurants getting tighter with increased labor costs due to minimum wage increases and higher rents, now more that ever does every cent count towards the bottom line.
Simply put, small percentages lost on food margins can lead to large amounts of lost revenue. McDonald’s sells 68 million hamburgers a day, so losing a single penny on their margins leads to losing $680,000 per day. Granted, most restaurants aren’t McDonald’s nor aspire to be. However, if you are a popular local restaurant or sandwich shop and your food costing is off as little as a dime for your menu, it is easy to lose more than $20-50,000 annually.
And finding a dime in lost revenue is not all that hard. Think about it, a recipe with seven ingredients only needs to be off by less than two cents per ingredient. You know you are supposed to do it and know you know why food costing is so important to the health of your restaurant. Food costing should be maintained continuously, however, doing it just once a week can make sure that your restaurant is operating in good financial health.
Food costing is that annoying little task that you know you are supposed to do, but you just don’t want to. You take every opportunity to procrastinate or make every excuse to get out of doing it. You know you are supposed to do it. You know it’s good for you. Though you can rationalize putting off food costing to make yourself feel better, the reality is food costing is directly related to the financial health of your restaurant. And global factors, out of your control, such drought, climate change, worker shortages and more greatly impact how much your plate of food costs to produce.