Maintaining the proper food cost ratio will help you price your items correctly and maximize profit. It's a valuable part of restaurant bookkeeping. Looking at this cost and optimizing the return on each dish can turn a floundering business into a profitable one. This number is used to establish prices and helps set the tone and quality of a business. Food cost provides insight into a restaurant or bar's profitability. This metric is always displayed as a percentage. Food Cost: What Is It?įood cost is the ratio of ingredient cost to revenue generated from food sales using those ingredients. We'll help you understand the purpose of calculating food cost and the steps involved. You don't want to let your costs get out of control because you didn't calculate things properly. To ensure accuracy, restaurant owners and bar managers need to know how to take inventory and update their restaurant chart of accounts. Whether you run a 50-seat metropolitan martini bar or a small mom-and-pop diner, knowing and controlling this cost will keep your business going. There's a reason why the restaurant failure rate is so high. That's why there are so many restaurant management books about the subject. It's important to learn how to manage cost for restaurant business.
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