A Recipe for Success

July 8, 2009

recipeCosted recipes are an essential tool for any food operation.  Without accurately costed recipes there is no of knowing if your product offering is profitable or if your financial performance is on target.

Theoretical Vs. Actual

With costed recipes and sales mix information it is possible to calculate the theoretical food cost.  This then enables the comparison between actual and theoretical food cost.  Any substantial variance between theoretical and actual food cost represents an opportunity to reduce costs, directly improving the bottom line of the business.

Menu Planning

In addition to calculating the performance baseline, costed recipes are critical to the planning process.  When creating a new menu it is important to know how much each item costs before settling on an appropriate selling price.

Costing a recipe does not need to be a complex task and does not necessitate the use of expensive software.   A set of scales, a calculator and a scratch pad is really all you need.  While costing recipes will not directly assist with the next service period, it has the potential to drive enormus benefits to a food operation strategically.

2 Responses to “A Recipe for Success”

  1. poonks Says:

    hi, what’s the standard/normal level of cost of food (margin) per price?

    thanks a lot!

    by the way, i really love your blog, very informative 🙂

    • Paul Clarke Says:

      Hi Paulina,

      An acceptable Food Cost (typically measured in %) depends on a number of factors including:

      – OTHER COSTS (e.g. wages and rent) – Your Food Cost must be seen in the context of your overall business model.

      – TURN-OVER – Some operations work on low margins, but rely on high volumes to make enough money to cover costs and make a profit.

      The operations I have been involved in operate at around 30%.

      BTW: Thanks for the positive feedback.

      Cheers Paul.

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