A Visual Lesson on How to Calculate Your Restaurant Food Cost

A Visual Lesson on How to Calculate Your Restaurant Food Cost --- How to calculate restaurant food cost is one of the most frequently searched terms on YouTube. I even have several videos on my channel this topic. So why am I doing yet another video on food cost? Because you, my faithful followers, have been asking me to teach it using visual examples. This video is your visual lesson on how to calculate restaurant food cost.

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The Google Sheet shows you the calculation based on a week’s numbers. In a perfect world you are going to be calculating your food cost on a weekly basis. These days with software it makes it too easy to take inventory. I work with restaurant owners who have $2 million restaurants who take inventory in under an hour and they know their food cost right away. Doing this weekly also ensures when you have a problem, you discover it in one week rather than let that problem go on for a month or even longer.

Myth about how to calculate your food cost

A lot of people say to me, “David, I've been in this restaurant business a long time, and I was taught that you don't order product at the end of the week or the end of the month because it'll make your food costs go high.” That is a myth. You’ll be able to tell from the video best, but if you’re using your inventory in the right place in the calculation, you’ll see that the food cost formula accounts for the new inventory without increasing your food cost.

Use this formula to calculate your food cost

Beginning inventory plus purchases minus ending gives us use, divided by sales gives our food cost percentage.

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