How do I track food costs for my restaurant?
Food cost tracking comes down to one formula: beginning inventory plus purchases minus ending inventory equals your cost of goods sold for that period. Run this calculation weekly to catch problems before they destroy your margins.
Weekly inventory counts are non-negotiable. Pick a day and stick to it. Count everything in your walk-in, dry storage, freezer, and bar. Use consistent units each time. Weigh proteins, count cases, measure liquids by volume. Sloppy counting creates false variances that make the whole exercise pointless.
Track every purchase as it arrives. When deliveries come in, verify the invoice matches what actually came off the truck. Then get that invoice into your system the same day. Most restaurants lose money here because invoices pile up in a drawer and price increases slip by unnoticed. Your bookkeeping service needs accurate purchase data to keep your financials correct, so build the habit of processing invoices immediately.
Calculate your food cost percentage by dividing cost of goods sold by food sales for the same period. If you spent $4,200 on food and brought in $14,000 in food revenue, your food cost is 30%. What counts as acceptable depends on your concept. Fast casual might run 28-32%, full-service often lands at 30-35%, and steakhouses can hit 38-42% because of protein costs. Know your target and measure against it every week.
The more useful number is variance between theoretical and actual food cost. Theoretical cost is what you should have spent based on sales and your recipe specs. If your POS says you sold 50 fish tacos and each taco should cost $2.80 in ingredients, theoretical cost is $140. If your actual ingredient usage shows you spent $185 on those components, you have a $45 variance somewhere. That gap is waste, over-portioning, theft, or unrecorded sales.
Recipe costing makes theoretical food cost possible. Every menu item needs a spec sheet listing exact ingredients, quantities, and current costs. Update pricing when vendors raise prices or you change suppliers.
Restaurant owners who track food costs weekly instead of monthly catch problems faster. A 2% variance on $50,000 in monthly food sales is $1,000 walking out the door. You cannot fix what you do not measure, and you cannot measure what you do not count consistently.
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