## What is food costing in restaurants?

Try food costing software

Food costing in restaurants refers to the percentage of revenue spent on the ingredients used to prepare menu items. This includes calculating the total cost of goods and total sales. You can calculate the total cost of goods sold (COGS) by adding the beginning inventory and food purchases, then subtracting the ending inventory from the sum. Food cost percentage is the quotient of the total cost of goods sold divided by the total food sales multiplied by 100.

• Total cost of goods sold (COGS) = Opening stock + Purchase − Closing stock
• Food cost percentage =
COGSRevenue
x 100

Total cost of goods sold (COGS)

Opening stock +Purchase Closing stock

Food cost percentage

COGSRevenuex 100

## How does it impact profitability?

Calculating the right food costs enables restaurants to analyze which dishes are more profitable, adjust portion sizes, set the right price for items, negotiate with suppliers, optimize inventory management, and, more importantly, stay on the right track in terms of margin and ROI.

### Food cost percentage calculator

#### Values given in

Thousands
• Thousands
• Lakhs
• Crores

Opening stock of the month

Closing stock of the month

Total revenue for the month

Analyze menu pricing and consider reworking profit margins.

Investigate pricing, purchasing, or production issues.

## Benefits of calculating food costs in a restaurant

### Projecting the right price

Calculating the total cost spent on preparing an item, including the raw material, making, and overhead costs, enables restaurateurs to set the right price for menu items based on the food cost percentage.

### Better profitability

Optimal menu pricing and reduced waste maximize profit margins. Identifying high-margin items and adjusting their position in the offerings leads to better financial performance.

### Analyze financial health

With insightful data on food cost and the margin for each item, restaurants can have a clear view of the menu items' financial health and make necessary adjustments to improve profits.

### Better quality and happy customers

Understanding food costs enables you to maintain quality without compromising profitability. Establishing the right balance between quality and cost is key to building a loyal customer base.

## Why should you use Gofrugal for calculating your restaurant's food cost?

Efficiently manage your inventory and track real-time stock levels. Optimize the purchasing process by analyzing the costs incurred during production, including waste.

### Centralized recipe and menu engineering

Define, organize, and standardize all your recipes on a centralized platform for consistent taste throughout the year. Analyze the costs of each item and craft a flavorful yet profitable menu.

### Standard recipe and batch recipe

Create standardized recipes and easily adjust batch quantities for the recipes during bulk production to track production costs precisely.

### Production cost and bill of materials (BOM)

Establish a well-defined production plan with the required ingredient quantity and their purchase cost to calculate accurate production costs and create a detailed bill of materials for accurate pricing.

Shed light on the hidden and forgotten overhead costs like packing materials, labor costs, electricity, rent, and other production expenses. Have a separate master for packing materials and calculate the cost based on the materials used.

### Finished goods consumption

Track ingredient consumption at the finished goods level with additional cost, net cost, and gross profit for precise cost analysis.

### Analyze ingredient consumption

Drill down to individual ingredients to identify cost drivers and underutilized ingredients. Optimize the procurement and usage of individual ingredients for maximum cost savings.

### Using a semi-finished item for a new item

Utilize a semi-finished or fully-finished item as an ingredient for another item and manage their inventory and costs seamlessly. For example, using kaajus to make kaaju paste, and then using that kaaju paste to prepare kaaju katli.

### Repurposing Ingredients and add-on items

Effectively use excess ingredients obtained while making an item. Turn unused pizza dough into delectable garlic knots, or use those extra carrots and veggies to prepare a seasonal salad, and manage the inventory and cost of them, too.

## Challenges in restaurant food costing and how we solve them

### Challenges

• Overpricing
• Taste inconsistency
• Inaccurate tracking
• Overproduction

### Challenge

#### Overpricing or underpricing

Overcharging for dishes can price out your customers and underpricing makes delicious dishes undervalued. Both instances hurt your bottom line.

### Solution

Automated recipe costing ensures accuracy and consistency down to the tiniest ingredient. Centralized and standardized recipes eliminate variations and inaccuracies in measurements and costing.

Automated recipe costing

Ingredient wise costs analysis

### Challenge

#### Taste inconsistency

Handwritten recipes lack standardization, leading to inconsistent portion sizes and inaccurate costing. Providing uniformity in taste and quality becomes problematic.

### Solution

Centralized recipe management standardizes measurements, calculates costs precisely, and creates variations for menu diversification. Clearly documented ingredients, portion sizes, and preparation methods ensure consistency across all dishes. Price dishes confidently based on real data.

Centralized recipe module

Ingredient wise costs analysis

### Challenge

Overhead expenses and packing costs remain invisible, hiding the true food cost and hindering informed decision-making.

### Solution

Track overhead, packing materials, labor costs, electricity, and all other expenses to draw a complete picture of your true food cost to make precise pricing decisions.

Hidden charges

### Challenge

#### Inaccurate tracking of raw material availability

Overstocked ingredients expire, while understocked items lead to last-minute panic buys. Discrepancies between physical inventory and digital records become chaotic.

### Solution

Automated purchase orders and stock alerts keep inventory levels balanced. Track usage patterns, forecast needs, and negotiate with suppliers for bulk discounts. Conduct regular physical inventory audits and reconcile them with digital records to ensure accuracy in tracking and minimize discrepancies.

Inventory audits

### Challenge

#### Overproduction and wastage

Overproducing popular dishes leads to spoilage and ingredient waste. Underestimating demand for other items results in lost sales and disappointed customers.

### Solution

Implement a systematic approach to manage production quantities using batch recipes and production costing. Track and manage waste on each recipe and make more accurate production plans gradually. Repurpose excess ingredients into add-on items to minimize waste.

Batch production plan

Wastage management

## Overview of restaurant food cost software

### What is food costing software?

Food costing software, an integral part of restaurant management software, is a tool designed to calculate and analyze the cost of ingredients used in menu items. It helps restaurants determine the true expense of creating each dish, aiding in strategic pricing, waste reduction, and overall financial optimization.

### How much does Gofrugal's food cost management software cost?

Gofrugal offers flexible plans to fit your restaurant's unique needs and budget. For detailed information on the cost of our food cost management software, please request for a callback.

### What features are included in Gofrugal's food costing software?

Gofrugal's food costing software offers a comprehensive set of features to streamline your restaurant's operations and financial processes.

This includes:
• Centralized recipe and menu engineering.
• Standard recipe and batch recipe.
• Production cost and bill of materials (BOM).
• Finished goods consumption.
• Ingredient consumption.
• Using a semi-finished item for a new item.

### What are the benefits of restaurant food costing software?

The benefits of employing restaurant food costing software include:

• Improved profitability: Reduce waste, optimize portions, and price accurately.
• Projecting the right price: Calculate the accurate total cost of preparing an item and set the right price with the right margin for menu items.
• Happier customers: Delicious dishes priced to perfection build loyalty and repeat business.
• Analyze financial health: Clear view of the financial health of individual menu items.

### How can restaurant food costing software enhance my inventory control processes?

Gofrugal's food cost management software facilitates efficient inventory control and purchasing, enabling you to track stock levels and optimize purchasing processes effortlessly.

### How can I efficiently manage overhead and packing costs using Gofrugal's food cost software?

Gofrugal's food cost software allows you to factor in overhead, packing, labor, rental, and electricity costs, offering a holistic view of your true production expenses. It ensures accurate financial insights for better decision-making.

### Can your best food costing software help me identify high-margin items for strategic menu planning?

Yes, Gofrugal's food costing software features menu engineering tools and smart reports, helping you identify high-margin and popular dishes for strategic menu planning and enhanced profitability.

### How does Gofrugal's restaurant food costing software contribute to minimizing ingredient waste?

Gofrugal's restaurant food costing software incorporates features like tracking waste on each recipe and ingredient-wise waste, enabling you to manage production quantities efficiently and repurpose excess ingredients into add-on items to minimize waste.

### Can I try the food cost software before I buy it?

Absolutely. We offer a trial version of our food costing software for you to experience its capabilities firsthand. This trial allows you to explore the features and functionalities, ensuring the software aligns with your restaurant's specific requirements before making a purchase decision. Click here to claim your free trial.

## How do I get started with Gofrugal's food cost software?

Contact us today and schedule a personalized demo to discover how our solution can help manage your restaurant's food costing and get started with the best food costing software.

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