Posted by Jim McGinty
on Thursday, September 22nd, 2016
Like any other business, the goal of every restaurant is to turn a profit at the end of the day. In order to understand how to make a profit, you must first understand what makes up the cost. By looking at the various costs involved in the operation of the restaurant and by understanding them you can make your restaurant a success. You need to understand these before you start looking for applications that will help you control your costs.
The amount you spend on a recipe and how much it costs to serve a portion of that recipe. Recipe cost contributes to your overall food cost.
The cost of all the edible ingredients that go into the food you serve to your diners. This is the sum total of your recipe costs and is important for keeping track of your profitability.
Costs that includes salaries, benefits, and bonuses you pay your employees.
Everything else that falls outside of food costs and labor, e.g. building rent, equipment, taxes, utilities, etc.
Profit vs. Costs
To calculate your profit you would take your total sales for a period and subtract all of your food, labor and overhead costs.
Understanding the Numbers
The key to a profitable business is managing your costs to ensure you have a healthy profit. There are tools to help you identify early in the process if you have food or labor cost issues. The sooner you are aware of these issues, the sooner you will be able to correct the problems and add to your profits.
The target for recipe costs should be in the 30% to 45% range of your selling price
Make sure your employees are following the recipes