Despite constantly monitoring your fees, do you have a problem with too high foodcost? Would you like to reduce your expenses while increasing your company's profits?
Learn 6 Tested Ways to Reduce Foodcost!
What is Foodcost?
Foodcost is a financial indicator used in the food service industry that determines the costs incurred for ingredients used in the preparation of food. It is expressed as a percentage of the total costs a company has incurred to purchase ingredients in relation to the revenue from their sale. Accurate determination of this ratio is crucial in assessing the profitability of the business and setting appropriate prices that will guarantee a profit.
How to Calculate Foodcost?
Food cost is calculated as the percentage of the raw material cost divided by the net sales price.
For example:
If the total cost of preparing a given dish (cost of ingredients + cost of preparation) is PLN 17.50, and the selling price of one serving is PLN 35, the foodcost is 50%.
The foodcost ratio in diet catering should oscillate between 30-40%. The smaller it is, the better for the business. Therefore, it is worth checking it at least once a month and trying to lower it.
How to Lower Your Foodcost?
Now that you know how to calculate foodcost, it is worth paying attention to strategies that can help reduce it. Here are some of the most important points to consider if you want to lower your company's foodcost.
Seasonality
Seasonal produce tends to be cheaper and more readily available, so it makes sense to use it on your menu. An example would be zucchini, which costs about 5 zlotys in season, while out of season, its price can even double.
Optimize the Menu
By focusing on your best-selling dishes, you can optimize your menu and reduce the costs associated with less popular dishes.
Compare Supplier Prices
Reviewing different suppliers and comparing prices will allow you to choose the best deals. Directly contacting suppliers and negotiating terms can often lead to favorable prices.
FOODcost vs FOODwaste
Wasting food is not only an ethical problem, but also a financial one. A large amount of food thrown in the trash leads to a significant increase in costs. Don't forget about expiration dates either! Longer date = less wastage = less financial loss.
Optimize Your Kitchen and Packing
Effective inventory management, precise ingredient measurements, no packaging mistakes and proper storage of products can help avoid unnecessary food waste, which translates into savings. Optimizing the kitchen, on the other hand, allows for better menu planning that takes into account the optimal use of ingredients.
Foodcost Thresholds and Alerts
The issues listed above are obviously important, but ticking them off the list is just the beginning. You need to be ready for change and respond quickly to keep costs under control and avoid losses. This is no small challenge for many retailers, which is why foodcost's innovative thresholds and alerts can be a valuable tool.
With Flambia System, you set thresholds yourself for established price groups, and when product prices exceed them, you are immediately informed. This allows you to adjust menu prices on an ongoing basis to the current foodcost, and if necessary, the algorithm will suggest cheaper shopping options.
Take Advantage of Proven Tools
By implementing the above points and working with Flambia System, Primate Diet's foodcost was reduced by as much as 22%, increasing profits and optimizing costs. This is just one of many examples of how our System can contribute to the success of your business. Not only do we provide assistance with marketing and management, but also ongoing support with access to an Account Manager. Our specialists will help your company at every stage, from sales to planning to marketing activities.
Start saving on your food costs today! Visit our website and schedule a demo right now!
