FOODSERVICE MATH aka: I just want to cook, so how come I have to know this stuff?

FOOD COST First of all, what does the term "food cost" mean? First of all, what does the term "food cost" mean? Food cost refers to the cost of all food delivered to a restaurant (or other food service operation), whether raw or ready to serve. It includes transportation and delivery charges and taxes. Also known as "raw food cost" although this term is a bit out of date and misleading. Food cost refers to the cost of all food delivered to a restaurant (or other food service operation), whether raw or ready to serve. It includes transportation and delivery charges and taxes. Also known as "raw food cost" although this term is a bit out of date and misleading.

Why should you care about Food Cost? Food cost is often the largest expense category in many food service operations, and it is generally the easiest group of expenses for chefs and kitchen managers to control. This can be illustrated by reviewing some accounting fundamentals. Food cost is often the largest expense category in many food service operations, and it is generally the easiest group of expenses for chefs and kitchen managers to control. This can be illustrated by reviewing some accounting fundamentals.

What is gross profit or gross margin? Gross profit, also known as gross margin, can be defined as the difference between the cost of food served and the money taken in as sales. Gross profit, also known as gross margin, can be defined as the difference between the cost of food served and the money taken in as sales. $10.00 sales - $6.00 food cost = $4.00 gross profit $10.00 sales - $6.00 food cost = $4.00 gross profit

gross profit - gross margin Gross profit refers to the moneys available to cover all other expenses: labor, operating expenses, and, finally, profit. Gross profit refers to the moneys available to cover all other expenses: labor, operating expenses, and, finally, profit gross profit 4.00 gross profit labor costs labor costs operating expenses operating expenses 1.00 net profit 1.00 net profit

How can we increase net profit? Reduce labor cost---this works if others are willing and able to perform the job duties for less pay. Reduce operating expenses---rarely available in the short term--- reduce food cost---BINGO sales sales food cost (a 16% reduction) food cost (a 16% reduction) 5.00 gross profit 5.00 gross profit labor and operating expenses labor and operating expenses 2.00 net profit (a 100% increase) 2.00 net profit (a 100% increase)

For This To Work You Must Know (a) what your food costs are, and (a) what your food costs are, and (b) how to control and change those costs. (b) how to control and change those costs. That is what this math course is all about. That is what this math course is all about.

What Else Could Be Done To Increase Net Profit In The Above Example? Increase SALES by increasing the number of customers, increase the check average, or increase the menu prices. Increase SALES by increasing the number of customers, increase the check average, or increase the menu prices. Theses all work mathematically, but they may not be practical. Theses all work mathematically, but they may not be practical.

Why Aren’t They Practical? Because, presumably management is doing everything it can to bring in customers already; increased advertising will increase operating expenses. Because, presumably management is doing everything it can to bring in customers already; increased advertising will increase operating expenses. Increasing menu prices may not be practical because of competition, a resulting decline in overall sales, and the actual cost of reprinting a menu and reprogramming cash registers, etc. Increasing menu prices may not be practical because of competition, a resulting decline in overall sales, and the actual cost of reprinting a menu and reprogramming cash registers, etc.

The One Area That You, As Chefs and Managers, Can Control. How can the $6.00 figure in the first example be reduced? How can the $6.00 figure in the first example be reduced? Reduce The Quality Of Food Served Reduce The Quality Of Food Served Reduce The Quantity Of Food Served Reduce The Quantity Of Food Served Reduce Waste And Loss Reduce Waste And Loss

Cost Analysis How Did We Know That The Food Served Cost $6.00? How Did We Know That The Food Served Cost $6.00? Someone conducted a cost analysis on the item. How that analysis is done is one of the things that you are going to learn from this course. Someone conducted a cost analysis on the item. How that analysis is done is one of the things that you are going to learn from this course.

Again, Why Should You Care? Because by learning this material you enhance your own bottom line. You become more marketable and you'll possess more of the skills necessary to be successful in this industry. Because by learning this material you enhance your own bottom line. You become more marketable and you'll possess more of the skills necessary to be successful in this industry. The first step in learning to cost out recipes is learning measurements. If you don't understand how to measure, and how to convert measurements properly, you won't be able to prepare, or to cost out, recipes. The first step in learning to cost out recipes is learning measurements. If you don't understand how to measure, and how to convert measurements properly, you won't be able to prepare, or to cost out, recipes. If you know measurements and you know how to use a calculator, you're more than halfway there! If you know measurements and you know how to use a calculator, you're more than halfway there!