The Food Cost Maze

Your emails tell us that some of you don't understand food costs calculations, and that food cost formulas are like a confusing maze for some. 
So, we decided to discuss costing out menus, and show you how we do the math.
The simplicity comes down to how much you pay for food and how much you need to charge for it.

We like to see food costs around 30-35%, this means if it costs you $1.00 for something, you need to charge minimum of $3.34.  Some want the food costs even lower, that's fine if you are worth it and people are willing to pay it.
But for our purposes here, the food cost are set between 30% and  35%.

Lets say we are serving a steak dinner.

The initial cost of the steak dinner can be divided into two areas:

1. Let's pretend the meat costs you $7.00 per portion.
2. Let's say the plate also includes a starch, vegetable, salad and bread, so we'll add an additional $3.00 for that.

This makes he plate cost total $10.00.

Remember, every thing that goes onto the plate needs to be accounted for.

So how do you decide on the menu price?

Here's the formula:

Cost of your product/.35=menu price or $10.00/.35= $28.57

If you want even a lower food cost, let's see what 30% gives us.
Cost of your product/.30=menu price or $10.00/.30=$33.33

We have seen many formulas, but this is the one we use, it's simple and it gets the job done.
But if you need something more sophisticated to determine your food costs, we may have just the thing for you.
It's the Cargill  FOOD COST CALCULATOR