How To Determine Your Food Costs

Inventory Method: The most accurate method of determining monthly raw food costs is the inventory method. This is done by accurately counting the inventory in all storage areas, Coolers and Freezers and the determining the dollar value of the inventory. The formula for determining raw food costs using this method is:

Choose a unit of measure for each food item. It is best to use the same unit of measure that your food service provider uses. (Examples are: beef, by the pound or canned foods by the can, etc.)
and determine a price for each unit of measure. (example: beef is $5.69 per pound, tomato sauce is $5.69 per can, etc.)

Take an inventory of all your food items. This will be your beginning inventory or opening inventory.

Use a spread sheet with 8 columns.

1. Place the name of the item in column 1.
2. Put the amount of your starting inventory in column 2 (name this column open).
3. Put the new deliveries in column 3. (Name this column del.)
4. Add columns 2 and 3 together and put the total in column 4. (Name this column total)
5. Put the number of your new inventory in column 5. This is the inventory you have just taken. (Name this column left.)
6. Subtract column 5 from column 4, this will tell how much you used and put that number in column 6.(Name this column used.)
7. Put the price of each item in column 7. (Name this column price.)
8. Multiply what you used times the price in column 7 and this will give you your usage. (Name column 7 usage).

Beginning inventory (This is the ending inventory from the previous week).

+ Purchases (for the week taken from your supply receipts)

- Ending inventory (This is the Inventory you have left at the end of the week).

= usage

x Multiply times the cost of each unit of measure

= Current week's food cost.

Recipe Method: This method is based on determining the total cost of food for each standardized recipe. The cost of each ingredient is added together and divided by the number of servings. Recipes must be used exactly as written (ingredients measured and correct portion sizes). Most facilities need computer software to assist in this method

There are lots of software programs you can purchase to help you do this or you can use freeware, which offers spreadsheets you can use on your computer (culinary software)

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