Have you ever created a new menu item and just looked at what your competitors were charging for it? Or trusted a manager who said they cost it out and just picked a number to put on the new menu item? You really need to know exactly how much each menu item costs you so that you can have your restaurant menu pricing maximize your cashflow.
Restaurant Menu Pricing Based on Ideal Food Cost Percentage
We want our food costs to be low, but we also need cash in the drawer to pay bills. What actually pays bills is cash. For example, if you’re selling an 8-ounce filet for $40, you might have a 45% or 50% food cost, but it’s $20 in the drawer. You could be selling a sandwich with a 25% food cost, but maybe it only puts $8 in the drawer. So you really need to know exactly how much you’re paying for every menu item to set yourself up for success and know when you need to raise prices or maybe run a special.
How to Calculate Food Cost
I’ve got a sheet here that’s completely free. If you want a copy, just go to restaurantresults.co/tools. You can sign up and have access to all of our free worksheets.
In this video, I’m just going to do a quick walkthrough and show you how it works. When you come in here, just make a copy of the sheet like that. Call it whatever you want, and it’ll be attached to your email account. You’ll be able to edit this one.
Always leave the first one in the corner as a template. Whenever you want to use it, just copy and paste it. You can work to the right or work down. I’m just going to work down.
Now you’ll be able to edit this one. You only need to worry about editing the cells that are highlighted in yellow. So if we’re looking at a case of chicken breasts today, put in today’s date. Let’s say it’s supposed to be a 50-pound case, and we’re paying $1.74 per pound.
It’s going to automatically calculate the total cost per case. All you need to do is take a recent invoice and update the actual numbers and cost. It’s going to calculate that. Now you need to know exactly how much each case yields. So let’s say for chicken breasts, they’re supposed to be 8-ounce averages, so you’re supposed to get 100 chicken breasts per case. But maybe only 85 of them are usable.
Determine Your Ideal Food Cost Percentage
We’re going to do 85 individual units, and you can choose if it’s going to be ounces or pounds right here. Now it’s showing us that we’ve got 85 chicken breasts, a little over 41 pounds of the 48.5. So our actual cost per chicken breast is 99 cents.
Let’s say you can use the scraps for another recipe, maybe a dip or a soup. I’m just going to call it scraps. Let’s say there are 5 pounds of that that you actually get out of it. So now each pound of scraps is costing you $1.83, and you can see down here where you’re utilizing 95% of the case of chicken breasts, and a little over 2 pounds is being wasted.
So that takes that out. It actually accounts for that. So now we know, like in your scrap recipe, if you want to change this to ounces, just call it 80 ounces. So now you know if you have a recipe for a dip or something like that and you need 3 ounces of the chicken scrap, it’s going to cost you 33 cents.
Or if you’re building a plate and the chicken breast is the main part of the protein, the main entree, you know it’s adding 89 cents to that plate cost. So all you need to do, if you have a huge menu, this might take you some time, but literally make a copy of this table for each of your menu items, and then you can know exactly how much everything on your menu costs you.
Conclusion
That’s it for today, and I hope you find that helpful.
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