Food Finds Asia| Things You Need To Consider About Calculating Recipe Cost |If you know how much menu items cost your business, you can work around it to estimate profits. In essence, you can make every dish profitable.
However, you have to calculate everything, including the cost of the ingredients, preparation time, cooking time, and so on. The idea of estimating food or plate costing can seem easy, while in truth, it requires a lot of groundwork to arrive at the actual cost of the items. If you plan to open a restaurant, it is much more essential for you to have awareness about this process. Don’t worry if you don’t know much about it. Here are some insights to help you in this area.
Calculating recipe costs
You have to calculate the cost of your Ingredient. You can list all the ingredients that go into a recipe, and determine the overall price of each item, whether it is a 10lb bag of something or more. Find out how much of a particular ingredient will go into a recipe and divide the overall ingredient cost by its quantity used in that recipe.
It will give you the cost of a specific meal. Experts say that the food cost can make up about 28 to 35% of the menu price. Going by 28%, if you spend $2.8 on a dish, your menu price can be at least $10.
It deserves mention here that calculating food cost is just one part of the process for any restaurant business as it has to deal with many types of expenses.
Dealing with price fluctuations
When ingredients become cheap, your margins go up. However, if they turn expensive, your profit margins go for a toss. It is wise to maintain your food costs to about 28% of the menu price. It can accommodate up to 7% of the price fluctuations.
Experts don’t recommend changing menu prices every week to adapt to the rising costs. However, if things get too pricey, you can do away with a few items for good or until the scenario improves.
Some restaurateurs go for locked-in costs with their suppliers for a determined period, whereby the supplier assures of a price for 30 days or so. You can also get into this type of arrangement to make sure your menu prices return good profits.
At the same time, it is better to track the prices every week or month so that you can take pre-emptive steps to keep in check the cost of your plate from exceeding 35% margin or do something that safeguards your profitability.
Nowadays, you get recipe costing software in the market. If you want to automate this process and save time, you can choose one for your business. These solutions tend to be useful for their feature richness.
With the help of a tool, you can quickly estimate the cost of your recipe, check all the recipe costs, experiment with recipe cost, and more. Just make sure the one that you select for your business is well-recognized and trustworthy. If you manage to find the right software solution for this purpose, a lot of your stress can get minimized, and your profits may improve.