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Food cost

Any catering activity, from small bars through large holiday centres, sanatoriums and hotels, requires proper financial management to make it profitable.
Food cost - what is it?Food cost is the cost of goods used up to prepare meals in the offer, expressed as percentage of the selling prices. This index can regard both single dishes and the whole production of gastronomic premises.
How to calculate food cost?You should begin with preliminary kitchen warehouse stock, taking to set the initial value of groceries on stock. Then add delivery prices of the products taken in over the whole period for which food cost is calculated. It is usually one month. Next deduct the value of final kitchen warehouse stocktaking from this result. At the same time this value would be an output for another calculation period in the next month. All calculations are made on the basis of net prices.
Knowing the value of raw materials used up in production over a specific time period, you can now calculate food cost.
Avoid mistakes!Food cost is an objective measure of the activity cost only when it is calculated correctly. The commonest mistake is to determine the food cost value on the basis of costs calculated from recipes. Recipes can only be the basis for calculation of so-called potential food cost, which is used to plan a menu and individual dishes.
*calculated on the basis of going through a recipe
Advantages of food costObjective cost assessment:
We consider products that were actually used up. This allows financial capabilities and needs of the premises to be determined.
Easy to apply
The calculation method is easy and clear. It can be carried out in small premises without use of specialist computer programs.
Of course, it requires accurate calculations
Any warehouse deliveries have to be reported. It is also necessary that products, which are picked up from the warehouse but are not going to be sold by the kitchen, should be deducted too.
Provides head chefs with freedom of actionThe detailed arrangement only concerns the level, which food cost is to be maintained at. The culinary invention is not restricted by strict recipes.













