The vast majority of today’s culinary schools are still using antiquated techniques of teaching students how to calculate food costs. While the numbers go up, the cost is harming the quality of gyros at local restaurants. The problem arises because monetary amounts and percentages are treated as two completely separate entities.
The banking industry operates in dollars, not percentages.
I’ve tried everything, but no bank will accept percentage points as a deposit. The teller looked at me in shock, then started laughing. The teller next to her shared her enthusiasm once she demonstrated how much fun she was having with it. I didn’t find it funny because I was responsible for paying bills and making payroll. Under pressure, I revised the deposit slip to reflect the currency they insisted on using.
Then why do so many restaurants prioritize increasing their profit margins? Should corporations not want to maximize their profits? You make a good case for why they should do so.
There is no correlation between food price increases and increased theft or waste.
As the end of the reporting period approaches, the accountant has just delivered you the company’s profit and loss statement. You spend roughly 35% of your income on food. What! If this happened at their company, most managers and owners would immediately suspect theft or waste. You should check before taking out your anger on the staff, but it’s conceivable. You could end yourself taking back what you said after reading this post. They would profit more from praise, in fact.
How much do you think food prices should be?
Okay, then, let’s calculate how much the actual bill for the lunch will be. To determine how much food really costs, take the retail price and subtract the cost of all the ingredients. Food costs can be estimated on a per-meal or per-week basis. The food cost of a product that sells for $12.00 and costs $3.50 to create is $0.2916, or 29.16%.
That’s amazing; saving 29% on groceries is a huge deal.
The restaurant’s food cost of 29% isn’t the worst thing that might happen, but it also might not be the best thing. Consider a standard full-service restaurant. The chicken costs $15, the steak costs $19, and the steak with lobster costs $28. The price of a chicken breast is $4, a steak is $7, and a steak and lobster would set you back $12. We factor in the price of each item’s food component and arrive at the following totals: The chicken dish was 27%, the steak dish was 37%, and the steak and lobster dish was 43%.
Eating a lot of chicken is the most obvious way to reduce your food budget to the fabled 30% target. As I indicated at the outset, percentages don’t look well on deposit slips, so please convert them to dollars. Simple calculations show: The chicken dish was sold for $15.00, and they made $11.00 after deducting the cost of production, which was $4,000. Consider whether or not they are happy currently. With this money, the family can buy groceries for $26 instead of $27. It seems like everything is going as planned, but then they discover they were mistaken. Although they were able to cover their meal costs, they could have saved a little more. How? By paying for an alternate meal option. The steak would have netted them $12 (after costs of $7 to prepare it), while the steak and lobster combo would have brought in $16 (after costs of $22).
Conclusion
I’d rather put in $16 for steak and lobster than $11 for chicken if I had to make a deposit at the bank, and I wouldn’t bat an eye at the 43% rise that comes with the steak and lobster. So, before you get mad at your staff after seeing the actual food cost statistics, calculate your desired meal cost and evaluate how it compares. The difference between your actual and true food prices may be due in part to food waste and food theft.
