Controlling food Costs

Report
How to get the most of your money










Raise prices to adjust to new food costs.
Cost out menu & price items accordingly.
Control portion sizes.
Minimize & track waste.
Spot-check prep staff ensure pre-cut portions
weigh what they are supposed to.
Link the chefs pay to a pre-set food cost %. Set up
an incentive deal for the chef.
Set up purchase order system.
Negotiate prices with vendors for bulk buying. Take
vendor discounts when offered.
Organize storage room & keep inventory to a min.
Purchase based on a budget.



A standard yield: expected qty. of
food that results from a standard
recipe. Stated in the total quantity
of food the recipe produces, such
as 3 gallons of clam chowder & by
the number of portions it produces,
such as 48–8 oz. bowls.
A standard portion: consistent
qty. of product served to each
person each time it is served.
Portion control tools: scoops,
ladles, a standard serving bowl, or
count promotes consistency and
customer satisfaction, and aids in
insuring a business’ profit.
1.
2.
3.
4.
Cost per Unit
Method
Yield Test
Cooking Loss Test
Standard Recipe
Using 1 or up to all of
these will help
you determine
your plate cost.

Edible portion is the form in
which the product is served.
Little/nothing needs to be done
to prepare a product in EP form.

Ex: purchasing prepared cheese,
cake that needs only slicing; a
case of 6 oz. chicken breasts
needing only to be cooked; or a
case of 24–10 oz. bottles of
sparkling soda need only to be
opened = ex.of EP.

Foods portion cost of a prepared
item purchased in its EP form
need to use the Cost/Unit
Method.
Formula:
PURCHASE UNIT COST # OF PORTION =
STANDARD PORTION COST
Example: The chef purchases a prepared
cheesecake for $8.00. Using the12-slice
portion, the Standard Portion Cost is
calculated as follows:
Purchase Unit Cost
$18.00
Practice Part 1
Number of Portions
/
12
Standard Portion Cost
=
$1.50

Yield test: process of raw product
purchased in “AP” form -broken
down into EP & waste.

Purpose = is to determine the
yield, the cost/lb, and the cost/per
portion of a product purchased in
an “AP” form. You break down the
product into useable product &
non-usable waste

Ex. Food/beverage items: A case
of green beans), poultry (a turkey),
seafood or meat (10 lb. beef
tenderloin), canned (#10 can
chopped tomatoes), bottled (14 oz.
artichoke hearts), & frozen items
(5 gal. ice cream) prepared prior to
purchasing. Many products are not
100% usable & include some waste.
Calculate the Edible Yield %
Number of Portions
Edible Cost per lb.
AS PURCHASED COST / EDIBLE WEIGHT =
Green Beans: $38.00 / 22 lb. = $1.73/lb.
Edible Cost per Portion
EDIBLE COST/LB.

Illustrates the relationship b/w EP & AP in % or decimal form.

This means that the EP Cost/LB is 1.095 x >AP cost/lb.
 EP/Portion
increase.
Practice Part 2
is .0203 x > than AP. = 20%
 By
knowing the
entire cost of the
recipe, the business
can determine the
standard portion
cost and adequate
selling price, in
order to insure that
all costs in
preparing the recipe
are covered and
profit is realized.
 Step
1: Fill in the required information: name of the
recipe, standard yield, standard portion of ingredients
including garnishes from the standard recipes. Post the
AP price in the cost/unit column.
 Step
2:
 Step
3: Determine Yield %: Look up in chpt.11 or book
Calculate the Individual Ingredient Cost.
Ingredient qty. x price = individual ingredient cost.
of yields if there is trim plug in edible yield % in form.
Recipe:
Yield:
Ingredient
(1)
Chicken Tetrazzini
48servings
Serving Size:
Amount
(2)
Purchase
Unit
(3)
(A) Spaghetti
6 lb.
(lb)
(B) Margarine
2 lb.
(lb)
(C) Celery
2 qt.
(D) Onions
1/24 (12" x 20" x 2" pan)
Cost Per
Purchase Unit
(4)
Ingredient
Cost
(6)
6
$ 6.18
.89
2
1.78
Bunch
.99
1.5
1.49
2 qt.
(lb)
1.69
2.2
3.72
1 lb., 4 oz.
(lb)
2.10
1.25
2.63
2.5 oz.
(lb)
.88
.16
.14
1 tsp
(lb)
---
---
2 gal., 2 c
----
---
---
---
12 lb., 8 oz.
(lb)
2.35
26
61.10
(J) Mushrooms
2c
(lb)
4.95
.33
1.64
(K) Green Pepper
3c
(lb)
3.05
1.2
3.66
(L) Bread Crumbs
2 qt.
(lb)
1.90
1.75
3.33
(M) Sharp Cheese,
shredded
2 qt.
(lb)
5.25
2.0
10.50
(E) Flour
(F) Salt
(G) Pepper
(H) Chicken Stock
(I) Chicken
$1.03
No. of Purchase
Units
(5)
---
Total Cost:
$96.17
Abbreviations used: lb – pound; qt = quart; oz = ounce; c = cup; gal = gallon; tsp = teaspoon
96.17
(total recipe cost)

48

(recipe yield - no. of servings)
See practice p 3
$2.00
(per serving cost)
Entrée:
Costing Date:
Item
Fresh White Fish Dinner
8/03/20xx
Menu Item
Cost Per Serving
Entrée
Fresh White Fish
$ 4.23
Potato
Three Choices Daily
0.37
Vegetable
Four Choices Daily
0.42
Salad
Tossed Green, Caesar, Spinach
1.12
Dressing
5 Choices Daily
0.37
Garnish
Lemon Wheels
0.02
Bread Loaf
Butter
Condiment(s)
0.27
Butter/Margarine
0.06
0.03
Total Entrée and Accompaniments Cost
$6.89
 Value

Perception
Perception is reality
 Pricing


Psychology
Price endings of .99 more suited to qsr menus.
0 and 5 endings more suited for full service menus
 Economic


Influences
Elastic vs. Inelastic
Flexible vs. Inflexible

Step 1: Determine the selling price multiplier by
dividing the budgeted food cost percentage into
100% ($1.00).
1
Budgeted


food cost percentage
1.00
 2.70 selling
price multiplier
.37
Step 2: Determine the menu item’s base selling
price by multiplying the estimated food cost by the
selling price multiplier.
$4.99
(food cost for pork
chop dinner)
x
(selling
2.70

price multiplier )
$13.47
(base selling
price)
2 versions of the formula:
Food Cost
 Contributi
on Margin
 Menu Price
Combination:
Food Cost (Total nonfood
cost  Target profit)
 Menu Price
Total # of Customers

Works for a la carte menu items as well as grouped items: soup,
entrée, salad, etc.

Uses operation-wide data to determine a $ amount that must be
added to each major menu item’s food cost.

Can use the same contribution margin for all items or use
categories.
Practice Part 4
Pricing Factor or Multiplier:
This formula gives a factor by which a food cost is multiplied to get a selling
price.
Formula: 100% / Desired food cost = Pricing Factor
Pricing factor x Food Cost = Mathematical Price
Example: Food cost is $2.73 and the desired food cost % is 35%.


100%/35%=2.86 factor
2.86 x $2.73 = $7.81






If food prices are rising
rapidly customers may
recognize the need of the
operation to raise prices.
In periods of stable prices
where other factors may
dictate increases customers
may not be as willing to
accept price increases.
Sometimes menu items are
removed and then brought
back in anew manner with
a higher price.
It’s not wise to raise all
prices at once.
Market Price.
Daily inserts for items that
have costs that fluctuate.

similar documents