[Question] Food Cost Calculations

[AmithS]

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!

[sterne.law@gmail.com]

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.

[AmithS]

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

[AndyD]

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.

[IanF]

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.

[sterne.law@gmail.com]

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%

[AmithS]

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!

[sterne.law@gmail.com]

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

[IanF]

Fats food store

Freudian slip Anthony?

[sterne.law@gmail.com]

Ha Ha!!! Make a good name for a franchise though?

[AmithS]

agreed oil plays an important part in the costing of fresh chips. i have been trying for a while now to get a good indication of fresh chips costing and it is difficult as it varies with every pocket. because of the way you peel each pocket etc...

do you have any experience with chip white ? i believe it keeps your chips lasting longer before actually frying them.

I think Steers uses chip white

[sterne.law@gmail.com]

Most chip manufacturers use chip white. It does keep them probably even for 2 days but in turn affects taste and damages oil.

The alternative is to keep covered in water. Then dry off and blanch. Blanch chips in morning for whole day.
Blanching(160) cooks them. When the order comes whack tehm at 180
Always blanch enough, that way temperature control is kept. problems coem when you suddenly run out and they start cooking from raw at 180

[AndyD]

Chip white is used only before blanching usually. I don't think it's a taste or quality thing, as far as I know it's just to stop discolouration of the chips between slicing and cooking.

Shortening gives better tasting chips than sunflower or rape oil. Shortening is usually a white solid at room temperature and doesn't degrade as fast at cooking temperatures but it's more expensive. Palm oil is quite popular nowadays but it's a saturated fat which is considered less healthy and causes high cholesterol according to some but it handles highish cooking temperatures.

Fryer temperature calibration is important. If the oil is overheated then it's lifespan decreases very rapidly. Foods with batter or flour coating that ends up in the oil also reduces oil lifespan. Filtering oil periodically during the day can profoundly increase it's lifespan. Old oil or overheated oil breaks down on a molecular level and eventually becomes very unhealthy and mildly poisonous, not to mention it tastes foul as well.

[sterne.law@gmail.com]

The whitener is used to stop discolouration but in turn affects the taste, marginally. The chips get cut and then dusted with the whitener which eventually gets absorbed.

Oils that solidify cause a problem with blanched, ie frwsh chips. the oil solidifies when they cool and absorb. Chips taste crap. If you want to use fresh chips then a pure oil.
If you use frozen chips then you can use blended oils.

i ran some oil testing in our restauranst with chips only and as a result moved to pure sunfower oil, found it lasted longer.
With blended oils you also cant tell the quality, any perosn can make blends. Basically the lwoer the price the more water and crap is in it!!!!!!!!

[AndyD]

....The chips get cut and then dusted with the whitener which eventually gets absorbed.

I think we're talking about 2 different products, I've only seen the liquid one one you add to the water.