Food Costing - Food Margin

FOOD
COSTING
AN INTRODUCTION TO COST
CONTROL
Chef Instructor: James Jesudhass

TABLE OF CONTENTS
01. 02. 03.

INTRODUCTION CONTROLLING
PRACTICE
Introduction to food FOOD COSTS Case study and formulas
costing. Steps in controlling food
costs.
01
INTRODUCTION
An Overview of Cost Control
What is food cost?
Cost is the price an operation pays out in the purchasing and preparation of its
products or the providing of its service.
Food cost is the expense to an establishment for food, incurred when food is
consumed for any reason.
Source: Anthony, V. et al. (2011, p147)

Type of costs
FOOD COSTS BEVERAGE COSTS LABOR COSTS OVERHEAD COSTS

Controllable costs Controllable costs Controllable costs Non-controllable costs
Source: Anthony, V. et al. (2011, p148)

02 CONTROLLING
FOOD COSTS
Variable and semivariable costs
Food cost percentage
Food cost and standard recipe
Controllable costs
An example of a controllable cost is food cost (variable cost). Management can control
this cost by using standardized recipes or exercising standard procedures for portion
control, menu listing, and pricing, or by one of several other restraints.
• Cost of food sold

• Given away
• Stolen
• Wasted
• Total recipe cost- the cost of all the ingredients in a recipe
• Cost per portion- the cost of a portion of food
• Ingredient cost- Cost per ingredient
Food cost in percentage
• Food cost percentage is a way to determine
how much your restaurant makes on any
given dish.
• An item’s food cost is the ratio of ingredients

and the revenue that those ingredients
generate when sold. It is always expressed
as a percentage.
• Food cost is often used to determine the

price of a dish in a restaurant.
• Business owners want to make sure that

they aren’t selling their product at a loss, so
they use this number to set a price.
What is a good food percentage?
Most restaurants across the industry aim for a food cost percentage between 28 and 35%.
That said, every restaurant is unique.
A lower food cost percentage may still drive profits for a quick-serve restaurant, or a restaurant
located in a small town.
Food cost is one of the key indicators of profitability for a restaurant.

If a restaurant allows its food costs to get too high in relation to menu prices, its profit margins
become even tighter — and the business may fail.
By closely monitoring food cost percentage, restaurant owners can know when to change menu
prices, look for new suppliers, or even switch up their menu entirely to stay profitable.
While doing this requires a certain amount of work, it is critical to your success as a restauranteur.
Food cost and standard recipe
• A standard recipe is a vital document in a food
service operation as it yields the same result on
portions size, taste is consistent.
• Used for training the back of the house staff
• Consistency in the production of menu items
• Provide food cost control
• Help service staff used it to advice dietary concerns

and allergies
• Control food cost and profit
• Deduce waste as food is prepared exactly what is

needed to produce the menu items
• Standard recipes provide control which is a major

factor in food cost control and profit
Main components of standard recipe
• Name of the menu item
• Total yield or portions and portion size created by producing the recipe
• List of all measured ingredients
• Step-by-step instructions on how to prepare, cook and assemble the recipe
• Plating instructions and garnishes
• Holding instructions
• Cooling instruction, if applicable
• Shelf life and storage instructions

When writing recipes, make sure
ingredients are accurately weighted,
measured and costed.
Standard recipe:
Basic concepts & terms
Measurements
• Metric system
• Dry – weights: grams, kilograms
• Liquid – volume: milliliter (ml), liter (L), cup, tablespoon, teaspoon

Key terms and concepts
As purchased (AP)
• Value of amount of food bought
• Amount of food that comes in the door before anything is done to it
• Kilos, pounds, cans, bottles, sacks, cases, split cases, flats, pieces, dozens, etc.
As Served (AS)
• Amount of food either served or used in a recipe after trimming or cooking
• Used as basis for determining how much to buy
Edible Portion (EP)

• Amount you expect the guest to eat, usually steak which is priced based on cooked
weight
• EP and AS can be the same in some instances.
Key terms and concepts (cont.)
Yield Percentages (Yield Factor)
• Measure of the factor by which an item changes due to trimming, draining and/or
cooking.
• Percentage of a whole purchase unit of meat, poultry, fish available for portioning after
any required in-house processing has been completed.
• AS / AP = Y %
• Amount served divided by amount purchased
• E.g. 2500g carrots= 2000g usable carrots
Y = 2000/2500= 80 %
• Trim Yield: Amount of food left over after trimming of fat, peel, etc.
• Cooking Yield: Amount of food produced after cooking, roasting, boiling, etc.
• Static Foods: Used just as they are bought: sugar, flour, rice, herbs, coffee, etc.
Calculating ingredient cost (all
unit)
Cost of AP
= Ingredient Cost
Total weight/volume
$57.98
= $0.12 per gram
500g
• Cost per ingredient is the first
step in all food costing
• You must get all the ingredients

to the simplest weight or
volume
• This can vary from recipe to

recipe
• Sometimes it is easier to leave

the ingredient in kilograms or
litre, but not always
Let’s practice
Onions: $14.85/3kg
Ingredient cost equals?
There are two ways: in kilograms and in grams.

Let’s practice
1. If food cost (FC) is $6.75, and if you want to
maintain FC at 33%, compute your selling
price.
2. If FC is $6.75, and if you want to sell this entrée

dish at $25, compute the FC %.
3. If you want to sell an entrée for $22 and want

to maintain an FC at 33%, compute your
portion cost?
Spaghetti Bolognese (6 servings)
Ingredients Net Weight Unit Unit Price Quantity Used Unit Actual Cost
Tomato Paste tin 170 g ₫53,000 65 g ₫20,265
Carrot 300 g ₫6,080 70 g ₫1,419
Grounded Beef 400 g ₫240,000 400 g ₫240,000
Garlic Peeled 100 g ₫19,000 15 g ₫2,850
Local celery 500 g ₫27,000 50 g ₫2,700
Parmesan cheese 100 g ₫90,300 30 g ₫27,090
Onions 300 g ₫20,000 90 g ₫6,000
Oregano Dry (bottle) 12 g ₫5,000 5 g ₫2,083
Minced pork 195 g ₫24,375 100 g ₫12,500
Salt 1000 g ₫25,000 5 g ₫125
Red wine 750 g ₫200,000 50 g ₫13,333
Olive oil 1000 g ₫215,000 15 g ₫3,225
Pepper 15 g ₫1,050 15 g ₫1,050
Spaghetti Bolognese 500 g ₫36,000 400 g ₫28,800
Total Food Cost ₫361,440
Cost per Serving 60,240.01
Selling price at 33% mark up 80,119.21
Profit margin 19,879.20

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FOOD

Chef Instructor: James Jesudhass

01. 02. 03.

Source: Anthony, V. et al. (2011, p147)

FOOD COSTS BEVERAGE COSTS LABOR COSTS OVERHEAD COSTS

Source: Anthony, V. et al. (2011, p148)

• Cost of food sold

• An item’s food cost is the ratio of ingredients

• Food cost is often used to determine the

• Business owners want to make sure that

That said, every restaurant is unique.

Food cost is one of the key indicators of profitability for a restaurant.

• Used for training the back of the house staff

• Consistency in the production of menu items

• Provide food cost control

• Help service staff used it to advice dietary concerns

• Control food cost and profit

• Deduce waste as food is prepared exactly what is

• Standard recipes provide control which is a major

• List of all measured ingredients

• Step-by-step instructions on how to prepare, cook and assemble the recipe

• Plating instructions and garnishes

• Cooling instruction, if applicable

• Shelf life and storage instructions

• Dry – weights: grams, kilograms

• Liquid – volume: milliliter (ml), liter (L), cup, tablespoon, teaspoon

Edible Portion (EP)

• You must get all the ingredients

• This can vary from recipe to

• Sometimes it is easier to leave

Ingredient cost equals?

There are two ways: in kilograms and in grams.

2. If FC is $6.75, and if you want to sell this entrée

3. If you want to sell an entrée for $22 and want

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