Food rate is the percentage of the cost of ingredients relative to sales revenue. The lower the percentage is the higher the profit.
One of the most important tasks that must be solved already at the initial stage of the restaurant’s existence is setting the Prime cost report for menu items. This is quite simple: from this article you will learn how easy it is to make calculations and achieve excellent results!
Balance prices to cover all costs
You decided to enter the restaurant business – a fascinating world full of excitement and adventure – not as a guest, but as a full and successful owner? Congratulations! It does not matter if you own a restaurant or bar, you have the opportunity to make people happy! Visitors will reward you for your efforts and will come to you again and again. But how to balance prices to cover all costs associated with the launch and activities of the institution?
A wonderful tool to determine the cost of purchasing products from which you will prepare meals and drinks, and the profitability index of the enterprise is called food cost or it s much popular as calculating the Total prime cost. After its calculation, you can find a reasonable compromise between prices; make them profitable for the institution and attractive to the guests.
How to set the optimal prices for menu items
Experienced restaurateurs know how important it is to determine the cost of food and beverages in order to establish reasonable prices for meals from the menu, guaranteeing profit to the catering company.
Many visitors are well aware of the average level of prices for food and drinks. The price list can vary slightly depending on what institution is talking about – a coffee house is a restaurant, a beach bar or a nightclub. However, price nuances in the long term can have a significant impact on the functioning of your business. They are especially noticeable, for example, if you compare the cost of identical cocktails in different bars.
How to find a solution that is beneficial to you and your guests? In fact, it’s very simple.
Calculate Prices for drinks
Calculate the percentage of purchase costs for alcoholic beverages. In most bars (depending on the type), this amount varies from 20 to 25%, but in night bars can reach up to 30% or even more, this s the minimum indicators in fast food restaurants, coffee houses and dairy bars. Perform calculations will not be difficult if you regularly conduct an inventory. Determine the cost of preparation of each nonalcoholic and alcoholic beverage. It depends on the number of ingredients.
How to calculate the cost of one drink? Consider this on a simple example – prepare a popular gin and tonic cocktail. To make clear the calculation of the food cost of one drink, you need to sum the costs for all the ingredients necessary for its preparation: 30 ml of gin, 100 ml of tonic, 20 g of lemon and one straw.