Hey gang, due to the popularity of the Food Cost Beginners Formula, I have added a more advanced training for those of you who really want to understand and impact food cost and get the results similar to the most profitable independent restaurant concepts in the US. Enjoy! ~ Bo
Bo - I am a retired CPA and I really enjoyed this video. However, it was probably over most peoples heads. I was pleasantly surprised that you discussed breaking the accounting periods down into 4 weeks each instead of using months. This is one of the best ways of ensuring consistency in the Income Statements and making them comparable, not only from month to month but from year to year. This is called a 52/53 week accounting period and businesses need to apply to the IRS to change their accounting system.
This is dynamite information! I found your page when typing in calculating food costs as a personal chef. The information you've shared makes me excited to keep dreaming about a full on restaurant and has also helped me in many other areas. I will admit this video went over my head, but that's where inspiration kicks in. When you spoke about EDI it all clicked! I used to work for a transportation company and one of the owners created EDI software for our clients. To see the build up and back end in food form was really cool. Thank you so much for all of this information. I'm about 6 videos in! :)
Bo - Another way of controlling inventory is to have a program that takes the Recipe Cost Cards and multiply each ingredient by the actual sales of each item. This would then tell you how much of each ingredient on the Recipe Cost Cards was used / sold and then could be compared to the physical inventory. In addition, it could be used to determine how much to reorder. For example, if buns were used on several different menu items this program would tell you how many buns were used / sold. That would tell you how many to reorder and could be compared to the physical inventory to determine overage / shortages. Just a thought. Thanks
I think first you have to determine your recipe of yields or waste prior to creating a dish and somehow compare your total weight volume by total waste volume. The Book of Yields: Accuracy in Food Costing and Purchasing
Thanks for the feedback. This was an early video. I think we have better production value now with better sound. I really appreciate you watching and always looking for feedback. Thanks!
Bo - I was also pleasantly surprised to see that you break down your payroll between management, the kitchen, the bar and the wait staff. I have asked numerous "experts" what this breakdown should be and no one knows. Do you have any general rules for what this breakdown should be for a full service restaurant / bar like Applebees? This would help me considerably on a project I am working on. Thanks
Obviously this response is too late for the project you are/were working on but one that deserves an answer for anyone with the same query. As a rule, in full-service, management salary is typically 10% of sales. One of the reasons why this is so hard to answer is because many business vary in the salary expense. Some owners who work a manager function (on smaller concepts,) can take a management fee, a small salary, draws based on remaining profit, etc. But if you look at larger, successful, multi-unit concepts they tend to run at 8.5% - 10% of sales as a budgeted management salary to the labor expense. Again, this is in full-service. The metrics are much different and run with a much wider variance in QSR or limited service-models. Hope that helps.
Having a low food cost percentage does not always equal more money. Restaurant a could have a steak with a 50% food costthat actually makes more money than restaurant be with a 30% food cost at sells all hamburgers. So I can have a $50 steak with a 50% food cost that makes me $25 per plate. Or a $10 hamburger that makes me $7 per plate. so the food cost percentage is going to vary depending on what type of restaurant you are
What's going to happen when computers take over food costing and production, you scan your wrist or hand and just pay like all the other consumers. Big conglomerates will control the food industry ie: Uber, Uber Eats former CEO Travis Kalanick is now getting into "Cloud Kitchens/ Dark Kitchens". A tool used to serve or deliver becomes the master.
Hi , in buffet cost the coffee is included in my hotel but i wanted to know how many coffees oredered so i put the cost for the coffe with milk \ espresso and tea in the POS and then i know how much the cost of this items in 1 month. then i can understand the cost of the buffet per person. you think it make sense?
Obviously a very late response, but yes. That is a great idea. For buffets I would usually put coffee out and track both head count and how many total refills or urns I put out (including keeping track of refill urns) as well as the total amount of milk, creamer, stirrers, sugar cubes, etc. Once I had that data I could divide my headcount by total consumed oz. of coffee and accoutrement to come up with an average consumption rate per head count. Once I had the avg. consumable product by headcount I could come up with a more accurate cost and it would help me better understand how much to charge for it in the future. However, I did notice that different groups had a different consumption rates. For example, events like rotary clubs and chamber meetings had a higher person consumption rate than larger events like big seminars or corporate training events. Coffee consumption had a higher rate not just depending on the group type but also on the offering. I burned through more coffee on a smaller continental breakfast than I did for a larger breakfast buffet. I have assumptions on why but none that I could ever prove out, just supposition based on demographic, group type, avg. age of participants, etc. I hope that helps. Great thought, keep of the great work!
I would think you might want to cost coffee out as supply cost-controlled expenses like ketchup or napkins. You don't know if someone will order a cost after the meal any more than the use of napkins, ketchup or filters.
Hi Dotshiv. Thanks for the question... sorry the response isn't timely... but yes. I have put a video together to share the P&L logic I use and I will post a link to my P&L format in that video. Stay tuned and thanks for the feedback!
Hey gang, due to the popularity of the Food Cost Beginners Formula, I have added a more advanced training for those of you who really want to understand and impact food cost and get the results similar to the most profitable independent restaurant concepts in the US. Enjoy! ~ Bo
Thanks Bo ! Your videos are great ! #Inspiration
Bo - I am a retired CPA and I really enjoyed this video. However, it was probably over most peoples heads.
I was pleasantly surprised that you discussed breaking the accounting periods down into 4 weeks each instead of using months. This is one of the best ways of ensuring consistency in the Income Statements and making them comparable, not only from month to month but from year to year. This is called a 52/53 week accounting period and businesses need to apply to the IRS to change their accounting system.
This is dynamite information! I found your page when typing in calculating food costs as a personal chef. The information you've shared makes me excited to keep dreaming about a full on restaurant and has also helped me in many other areas. I will admit this video went over my head, but that's where inspiration kicks in. When you spoke about EDI it all clicked! I used to work for a transportation company and one of the owners created EDI software for our clients. To see the build up and back end in food form was really cool. Thank you so much for all of this information. I'm about 6 videos in! :)
Top notch information. Chef Vince
Bo - Another way of controlling inventory is to have a program that takes the Recipe Cost Cards and multiply each ingredient by the actual sales of each item. This would then tell you how much of each ingredient on the Recipe Cost Cards was used / sold and then could be compared to the physical inventory. In addition, it could be used to determine how much to reorder.
For example, if buns were used on several different menu items this program would tell you how many buns were used / sold. That would tell you how many to reorder and could be compared to the physical inventory to determine overage / shortages.
Just a thought.
Thanks
KC Culp great idea
KC Culp, this is a great idea! Thank you
I think first you have to determine your recipe of yields or waste prior to creating a dish and somehow compare your total weight volume by total waste volume. The Book of Yields: Accuracy in Food Costing and Purchasing
Just wondering why you waited 2 years to respond???
Very informative, but sound level is too low
Thanks for the feedback. This was an early video. I think we have better production value now with better sound. I really appreciate you watching and always looking for feedback. Thanks!
Hi Bo what software POS do you use
Bo - I was also pleasantly surprised to see that you break down your payroll between management, the kitchen, the bar and the wait staff. I have asked numerous "experts" what this breakdown should be and no one knows. Do you have any general rules for what this breakdown should be for a full service restaurant / bar like Applebees? This would help me considerably on a project I am working on.
Thanks
Obviously this response is too late for the project you are/were working on but one that deserves an answer for anyone with the same query. As a rule, in full-service, management salary is typically 10% of sales. One of the reasons why this is so hard to answer is because many business vary in the salary expense. Some owners who work a manager function (on smaller concepts,) can take a management fee, a small salary, draws based on remaining profit, etc. But if you look at larger, successful, multi-unit concepts they tend to run at 8.5% - 10% of sales as a budgeted management salary to the labor expense. Again, this is in full-service. The metrics are much different and run with a much wider variance in QSR or limited service-models. Hope that helps.
Having a low food cost percentage does not always equal more money. Restaurant a could have a steak with a 50% food costthat actually makes more money than restaurant be with a 30% food cost at sells all hamburgers. So I can have a $50 steak with a 50% food cost that makes me $25 per plate. Or a $10 hamburger that makes me $7 per plate. so the food cost percentage is going to vary depending on what type of restaurant you are
Joshua, you are 100% correct! People have to remember, you do not take % to the bank, you take $ to the bank. Excellent point and great feedback!
What's going to happen when computers take over food costing and production, you scan your wrist or hand and just pay like all the other consumers. Big conglomerates will control the food industry ie: Uber, Uber Eats former CEO Travis Kalanick is now getting into "Cloud Kitchens/ Dark Kitchens". A tool used to serve or deliver becomes the master.
Hi ,
in buffet cost the coffee is included in my hotel but i wanted to know how many coffees oredered so i put the cost for the coffe with milk \ espresso and tea in the POS and then i know how much the cost of this items in 1 month. then i can understand the cost of the buffet per person. you think it make sense?
Obviously a very late response, but yes. That is a great idea. For buffets I would usually put coffee out and track both head count and how many total refills or urns I put out (including keeping track of refill urns) as well as the total amount of milk, creamer, stirrers, sugar cubes, etc. Once I had that data I could divide my headcount by total consumed oz. of coffee and accoutrement to come up with an average consumption rate per head count. Once I had the avg. consumable product by headcount I could come up with a more accurate cost and it would help me better understand how much to charge for it in the future. However, I did notice that different groups had a different consumption rates. For example, events like rotary clubs and chamber meetings had a higher person consumption rate than larger events like big seminars or corporate training events. Coffee consumption had a higher rate not just depending on the group type but also on the offering. I burned through more coffee on a smaller continental breakfast than I did for a larger breakfast buffet. I have assumptions on why but none that I could ever prove out, just supposition based on demographic, group type, avg. age of participants, etc. I hope that helps. Great thought, keep of the great work!
I would think you might want to cost coffee out as supply cost-controlled expenses like ketchup or napkins. You don't know if someone will order a cost after the meal any more than the use of napkins, ketchup or filters.
Again with POS systems, you are dealing with averages that are not reliably accurate.
How to reduce wastage, how to improve Sales.
Weigh your waste. Make soup stocks with leftover veg. Purchase: "The Book of Yields: Accuracy in Food Costing and Purchasing"
Great stuff! Question, where would you account for food waste?
The Book of Yields: Accuracy in Food Costing and Purchasing
profit and loss accounts in excel sheet please
very informative thank you.
Thank you Sham Natural! I appreciate the feedback.
Hi, can you share restaurant p and l format. Plz
Hi Dotshiv. Thanks for the question... sorry the response isn't timely... but yes. I have put a video together to share the P&L logic I use and I will post a link to my P&L format in that video. Stay tuned and thanks for the feedback!