What’s it for?
The cost of the raw materials that you use in preparing your menu items is your food cost.
The Food Cost report helps you calculate what percentage those costs constitute of the total amount of revenues generated in your restaurant over a specified period. Keeping this percentage below your target rate (usually 20%-25% for a casual dining restaurant and up to 33% at fine-dining restaurants) is crucial for the success of your restaurant. While other costs are less flexible (like labor costs and fixed costs - rent, utilities, etc.), the food cost should be compatible with the actual sales.
The report takes the value of your inventory at the beginning of the period, adds to it your total purchases of raw materials during the period, deducts the value of your inventory at the end of the period and divides it by your total sales during the period: (Beginning Inventory + Purchases - Ending Inventory) / Sales.
We also provide you with the theoretical food cost calculation, based on your calculated closing inventory value (using your actual sales and recipes).
Additionally, the report presents your actual and theoretical gross profit percentage (which is your revenues after deducting your food cost divided by your revenue amount) and the deviation between the two in percentage and dollar amount.
How to run the report:
On the Side Menu click on Reports → Food cost report.
Click on “Add food cost report”:Select the date range: when you enter a start and an end date, you will be presented with date options in which you will be able to choose which exact count you would like to make use of. You will be able to choose either your physical or theoretical counts. The most accurate results, will be if you choose a period between two physical inventory counts. Important: if you select a theoretical ending count you will not receive a food cost value (only theoretical food cost value). Total sales in your currency is automatically populated, when your account is connected to a POS or you upload a Sales file. Otherwise enter the total sales for this period shown on your POS for this period.If not do not wish to have all of your purchases as part of the food cost, select the tags you would like to be included in the report. If you do not select specific tags it will take all items you have purchased (delivered items) via the system during the relevant period.
Click on Calculate.
4. It’s possible to sort the columns ascending or descending. Just click on the column title.
Your stock levels at the beginning of the selected period according to your selection of dates when running the report (physical or theoretical).
All your delivered items during the selected period of time. Make sure to receive your merchandise in the system under Purchase Orders.
Looks at delivered orders only and at original price of item (if any changes were made during delivery it will disregard it).
Note: when you run the report pay attention to the dates that you select the counts for. For example, you select your period to run the report to be between the 3 of March and the 10 or March, but then when you select the count (physical or theoretical) if you select counts done on different dates, for example on March 1 to March 10 the data will include those dates.
Please see at the end of this article how purchases' amount in food cost report is calculated.
Ending Inventory Count reflects your stock levels at the end of the selected period. To see a value for this field select a physical count, otherwise this will be null.
The sum of sales during this period that either you entered or was populated automatically by syncing with your POS system or from the file uploaded to Sales.
The percentage of the cost of your sales. The costs of the raw materials you are using in preparing your menu items (Beginning Inventory + Purchases - Ending Inventory) / Sales. Important: if you select a theoretical ending count you will not receive a food cost value.
values from count history.
Theoretical inventory at the end date of the report is calculated by: Beginning Inventory (quantity x catalog price master) + Purchases (calculated by quantity received x price in invoice) - Sales (calculated by quantity sold x catalog price).
Theoretical food cost:
The percentage of the cost of your sales based on your theoretical inventory.
Your theoretical food cost is based on your theoretical inventory, so it’s what you should have in your ending inventory, based on purchases and sales rather than an actual count. It is calculated as Beginning inventory + purchases - theoretical inventory / sales.
You can then compare Food cost with Theoretical food cost.
Gross profit:How much of your sales is your profit (after deducting your food cost). 100% - Food Cost% = Gross Profit%
Theoretical gross profit:How much of your sales is your theoretical profit (after deducting the theoretical food cost). 100% - Theoretical Food Cost% = Theoretical Gross Profit%
Deviation in %:
The deviation in percentage between your Gross Profit and your Theoretical Gross Profit. How close you are to what your profit should be. In order to understand where you stand in Gross profit deviation you must calculate: Gross Profit / Theoretical Gross Profit x 100
For example, let’s say that based on your purchases and sales it says that your Theoretical Gross Profit is 85%, however your Gross Profit, based on your count is at 75%. This means your gross profit is at 88.2% from what it should be 75/85= 0.882 times 100 = 88.2%.
Deviation in dollar:The deviation of your gross profit from theoretical gross profit in dollar amount. How much your deviation in % worth. Gross profit% - Theoretical Gross Profit% * sales (excluding tax).
How Purchases' amount is calculated:
When comparing the monetary amount under 'Purchases' column in Food Cost Report and your total amount of your invoices in Purchase Orders section, please take into account the following:
In Purchase orders
You are selecting the same time period of the report.
You are only including 'Delivered' orders.
If you are selecting specific tags in food cost report you are only including orders with items of those tags.
You are adding up all totals of all invoices, then subtracting all positive credits (appear without parenthesis at the top of the invoice) and adding all negative credits (appear with parenthesis at the top of the order).