{"id":29,"date":"2021-11-09T14:10:12","date_gmt":"2021-11-09T14:10:12","guid":{"rendered":"https:\/\/blog.morinhospitality.com\/?p=29"},"modified":"2021-11-09T14:10:17","modified_gmt":"2021-11-09T14:10:17","slug":"food-cost-percent","status":"publish","type":"post","link":"https:\/\/blog.morinhospitality.com\/?p=29","title":{"rendered":"Food Cost: You Don’t Take Percentages to the Bank"},"content":{"rendered":"\n

Food Cost: You Don’t Take Percentages to the Bank<\/p>\n\n\n\n

Restaurants have razor thin margins<\/em>. I hate that saying. It\u2019s a saying similar to one of those \u201ctips\u201d and \u201ctricks\u201d that catch fire after an influencer on social media rattles it off and goes viral. It is not a universal truth in food service. Restaurants could be money making machines. The following approach applies to catering as well.<\/p>\n\n\n\n

Restaurant margins could range from 0 to 15% on average. Reference any blog from a Restaurant Point-of-Sales service company for validity of the data. What, I ask, makes the restaurant any different from a top performing Fortune 500 company? Statista.com<\/a> logs Tesla\u2019s margins over the last 5 years to range from -35% to 21% and Finbox.com<\/a> pegs Paypal\u2019s margins at 15.5%. These are some of the best performing companies on the S&P and Nasdaq.\u00a0<\/p>\n\n\n\n

If the average money a restaurant can take to profit maxes out at 15% then, if properly run, a restaurant can perform just as well as some of the best performing companies in other market sectors. I am certainly excluding a \u201cSoftware as a Service\u201d company that aims for 80% margins, which is bound for a judgment day some time soon. The largest restaurant focused companies like Darden Brands<\/a> tend to take around 20% margins quarterly and Bloomin\u2019 Brands<\/a> will hover over 40%. The restaurant or catering business could be extremely lucrative but it must be run properly.<\/p>\n\n\n\n

So what can be said of food cost? As a manager, owner or chef, one metric that the office folk typically like to call KPI (key performance indicator) is your food cost percent. This is typically the glaring mark on your ability as a food service manager to perform to the standards set before you. 30% or lower is the typical deal. The food on the plate cost 30% of the selling price of the dish. If by the end of the month your physical inventory of food in-house plus the purchases made over the month, divided by total food sales comes out to anything over 30% you are considered a failure. <\/p>\n\n\n\n

Unless you work for a highly standardized and controlled environment then there is reasonable consideration to be made for variance in food cost especially if the following are true: <\/p>\n\n\n\n