To keep food costs in line, it is important to have consistently in portion control. Ingredients are purchased in weight, count and volume.
Calculate the cost of all ingredients used in the production of a specific menu item (the actual item, seasonings, garnishes).
Total these costs and divide by a food cost you wish to achieve for that menu item. This determines a menu price.
For example, a cheese burger with tomato, lettuce, and mustard on a wheat bun with a bag of chips has a total cost of all ingredients - $2.10. To achieve a 30 percent food cost for this burger, you can calculate a menu price by dividing $2.10 by 30 percent (.30), which would give you a menu price of $7.
Try to keep your food costs between 22 and 34%. If your food cost is 34%, that means you will be spending 34 cents out of every dollar for food. This will leave you with 66% to cover your labor costs and other expenses.
The Factoring Method - Multiply the cost of ingredients by three (this method does not include labor or other costs)
Gross Margin Pricing - The formula is gross profit minus cost of goods sold divided by net sales. A gross profit margin of 0.33:1 means that for every dollar in sales, you have 33 cents to cover your basic operating costs and profit. This is a good method for dishes having a high cost of ingredients. Click here for a gross margin online calculator.
Prime Cost Method - The formula is to add the cost of labor and cost of food, add a percentage for profit. This method is good for dishes that require a lot of preparation.
Competitive Pricing - Competitive pricing seeks to match what others charge for the same product or service. Conduct a market study and compare the prices to similar ones on your menu. That means pricing your product neither very far above or below what others charge.
Combination Pricing -This method considers all methods, factoring, gross margin, prime costs and competition, and tries to balance the prices of the competition with your costs and needs.
Software
ChefTec Software - Designed by an executive chef and a staff of programmers for food-service professionals. ChefTec lets you customize management reports and print out recipes, organize monthly inventory procedures, generate ordering lists and maintain your par levels. You can instantly analyze recipe and menu costs by portion or yield, update prices and change ingredients in every recipe.
Chef Office - ExecuChef started as a simple way to organize vender orders, value inventory and cost & scale recipes.
PC-FOOD II is a food costing, inventory and margin management system for use in restaurant, catering and all food service operations. Calculate and maintain food cost and required selling prices based on desired margin. Edit portion sizes and ingredient costs to see the effect on costs and margins. User selectable sorted displays and reports. Unlimited departments, export ingredients to file, up to 30 ingredients per recipe, up to 30 ingredients and/or recipes per menu item. Three levels of recipes (recipes may use other recipes). Also calculates total revenue, food cost and gross profit for a banquet, etc. Available option to change currency symbol. PC-FOOD II also maintains inventory quantity and value. Input your ending balances in the purchase unit and/or pack unit (i.e. 2 cases + 3 #10 cans). PC-FOOD II then calculates the ending value at the latest cost. Inexpensive - $49.00.
CostGuard - A tremendous inventory, recipe, menu, food costing and pricing tool. Software for food service operations: restaurants, hotels, institutions, corporate, B&I, clubs, caterers, retail, and educators.
Offers a 30 day free trial.
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Menu Pricing: How to Make the Process Easier & More Profitable
