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Thread: Food Cost Calculations

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    Gold Member Singhms's Avatar
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    Food Cost Calculations

    Hi Everyone,

    Lots of questions today

    When you do your food costing (i know if will vary depending on situation) what % of food cost do you target

    and then what % of food cost do you target for example a combo of burger,chips & drink?

    Thanks for the input!

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    Platinum Member sterne.law@gmail.com's Avatar
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    You target a percent based on what profit you need. You will also be factoring in the market forces - perhaps a special to attratc walk intrade. Loss eladers are a huge part in retail. In the word sof Raymond Ackerman - an island of loss surrounded by a sea of profit.
    Unfortunately competitors prices will need to be considered. Your sales mix also factors in. Customers dont do the maths of 150 gram burger vs 200 gram, they merely look at how much it costs. Alternatively if you want to sell the burger at R29 you may opt for a 150 gram instead of 200 to come in at your budgted 40% for example.
    Anthony Sterne

    www.acumenholdings.co.za
    DISCLAIMER The above is merely a comment in discussion form and an open public arena. It does not constitute a legal opinion or professional advice in any manner or form.

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    Gold Member Singhms's Avatar
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    i need to remeber that saying its a great one, an island of loss surrounded by a sea of profit.

    I agree with you there are so many things to factor in and to come up with the excellent draw card to you store to bring in the feet is the important one to decide on

    i guess i will be doing calcs all night

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    Diamond Member AndyD's Avatar
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    I know sit-down restaurant food costs often vary depending on the type of food. Normal food should sit around 25-35% food cost. Seafood can be considerably higher, even up to 50%. It's swings and roundabouts. The seafood food cost is higher meaning lower profit margins but higher spend per head so possibly higher overall profits.

    Food cost on certain items can be far lower. Coffee for example can be as low as 15% food cost in restaurants.
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    Moderator IanF's Avatar
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    This is one of my customers who is an consultant in the industry. Have a look at his website http://brandstrategy.co.za/ he is writing a series of articles on the industry. He has a sharp mind and a lot of experience.
    Only stress when you can change the outcome!

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    Platinum Member sterne.law@gmail.com's Avatar
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    Few if any restaurants should be or will be running at 25-35%. About 15 years ago the norm or target was 33-35%. Anyone running at 25-35% is ripping the customer off and must be perceived as expensive(see costing below). Some top end restaurants may run at 33%, because they are not really compared, price wise to the main stream and are considered expensive anyway.
    Sushi is generally costed at about 25% and you may find some italian or pizza restaurants running at 30 - 35%
    Beverage costs will generally be costed at 28-35% and the sales mix will determine the final percent. That is, the amount of spirits(high profit) and wine(lower profit) will determine percent.
    Food is generally at 38-42%. The 2 combined, food and beverage, is averaging 38-42%. Again the mix of food to liquor will determine this amount.
    Just a quick example of price comparing a 30% food cost to say 40%
    take a burger -
    200 gram X R35/kg = r7
    Roll = R2
    Garnish(lettuve, tom ,mayo etc) = R1
    Chips = R1.75
    Total cost ex vat R11.75
    Selling at 30% = R38.78 selling at 40% = R29.38 if you aim at 45% = R25.85
    Fast food can carry a higher food cost becuase generally the wages wil be lower, from kitchen and management side
    General expense breakdown - rent 15%(should be 10 but seldom achieved), Salaries 15%(overseas 20-25%), food cost 40%, running costs 15% total cost 85% profit 15%
    Again take aways and smallish fast food, get some better percent hence can run 42-45%
    Anthony Sterne

    www.acumenholdings.co.za
    DISCLAIMER The above is merely a comment in discussion form and an open public arena. It does not constitute a legal opinion or professional advice in any manner or form.

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    Gold Member Singhms's Avatar
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    hmmmm, i am running a fast food store.

    my last food costing is an average of 42% which is okay then.

    its only on the drinks in a fast food store your cost is quite high i.e. between 50 - 60%.

    do you use frozen or fresh chips?

    We do fresh hand made chips, this is difficult to cost. Any suggestions on this would be greatly appreciated!

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    Platinum Member sterne.law@gmail.com's Avatar
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    Fats food store with the take away element will not have as good a food cost as restaurant. Restaauarant is selling a can coke for R12-15, takeaway R7/R8, its what the market demands.

    Chips fresh vs frozen is quite complex. Factoring in oil consumption etc,etc.

    IU prefer fresh chips BUT i believe people are so used to frozen chips that using fresh probably does not offer a competitive advantage, in terms of product, like it should.

    If you are cutting fresh chips -
    Take a pocket or weigh out the starting amount. (the skins can make a tasty snack!!!!!)
    Cut them and portion, gives you the cost excluding oil etc
    To get a full costing you need to factor in the oil for blanching and cooking
    Probably this stage frozen are cheaper merely because it is possible to get a good quality frozen chip that is close in price to purchased fresh chips.
    The real cost factor is oil consumption. Frozen are also more consistent
    Anthony Sterne

    www.acumenholdings.co.za
    DISCLAIMER The above is merely a comment in discussion form and an open public arena. It does not constitute a legal opinion or professional advice in any manner or form.

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    Moderator IanF's Avatar
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    Quote Originally Posted by sterne.law@gmail.com View Post
    Fats food store

    Freudian slip Anthony?
    Only stress when you can change the outcome!

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    Platinum Member sterne.law@gmail.com's Avatar
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    Ha Ha!!! Make a good name for a franchise though?
    Anthony Sterne

    www.acumenholdings.co.za
    DISCLAIMER The above is merely a comment in discussion form and an open public arena. It does not constitute a legal opinion or professional advice in any manner or form.

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