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Food Quiz
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Pricing food - Why you're doing it wrong and how to fix it
By: Brandon O'Dell
One thing I’ll never forgive formal culinary schools for, is teaching new impressionable would-be chefs to use a budgeted cost percentage to price food menus. Chain restaurants share an equal responsibility for perpetuating this bad practice by focusing their managers on food cost percentages without letting them in on the secret that the cost percentage is a management tool, not a pricing tool.
Though most culinary programs teach many different methods for pricing food, every culinary student seems to emerge from the Culinary Institute of America or Le Cordon Bleu believing in the world of restaurants, all they have to do to be profitable is serve great food and deliver a 33% food cost, or is it 25%, or 35% or 30% or 19%? The truth is, hitting a budgeted food cost does nothing to guarantee there will be enough money left over from the sale to pay for things like labor, rent, insurance, linens, smallwares, uniforms, utilities, taxes, etc, etc, etc. Hitting that cost percentage really means nothing. Further, not hitting it only means, “I should give things a closer look.” It doesn’t mean there is a problem. On the contrary, a high food cost could mean you’ve been selling a lot of high cost items that contribute more gross profit per sale. Are you going to make more money selling 50 hamburgers priced at $6 that cost $1.50, or 50 lobsters priced at $30 that cost $15? As long as there isn’t a significant increase in the overhead of serving the lobster, gross profit dollars win every time. You don’t want to sell the item with the 25% cost and $4.50 gross profit, you want to sell the item with the 50% cost and the $15 gross profit. Rather than comparing the food costs, you should be comparing the gross profits from each item. Obviously, if you have $15 left over from the sale after paying for food (gross profit) compared to $4.50, you’re going to have a lot more money to pay your overhead and turn a profit.
If you want to create prices in your restaurant that guarantee you’ll have enough dollars left over after paying for food, you’ll need to make three important considerations:
Market price point - What does your market consider a fair price for the food you are preparing, served in the atmosphere you offer?
Menu item cost - I know I said you shouldn’t use cost percentages. That doesn’t mean you don’t include the cost of the food into the price. You need to keep up-to-date recipe dollar costs for every item on your menu, and use those costs to figure into your pricing.
Needed gross profit - What does every person who walks through your door cost you to serve? You have a lot more costs to cover than just food. That’s just a fraction of the picture. You must consider every expense of running your business when pricing menu items, including the profit you need to make.
I guess now...
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"Pleasure in the job puts perfection in the work."
Aristotle
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No Market Reports this Week. Market Reports are available 50 weeks per year. We will return next week with a full report!
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Food Costs for Happy Hour?
Community member krwell writes...
Is there a standard food cost for Happy Hour appetizers? Right now my
restaurant uses 65% but sometimes I think that is too high. So far I'm
fine with it because most of the people who order the happy hour
appetizers order some beers with it. But I'm looking for opinions....
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Held hostage by kitchen manager!
Community member Babysitter writes...
Hello, I own a nice casual dining restaurant and bar. It runs farely
well most of the time, but when it rains it pours. And its pouring
right now. Most of it seems to fall back on my kitchen manager who has
been at the restaurant for like 15 years. First let me start by saying
she cares about the place and her heart's in it. But she can be a grouch
and bite your head off. So my servers are afraid to ask her anything
when shes in a mood like that. I am too!...
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Greeting Patrons
Community member McDermott's Pub writes...
I am putting together some guidelines and suggestions for my employees
now when it comes to patrons. One of my biggest problems when going in
somewhere is that I don't get greeted when I come in the door. Often
times, especially when you walk in somewhere new, you don't know what
to do or where to go. Is it seat yourself...etc..I frequent another bar
in my town and I tested this on Friday night. I sat near the entrance
and time after time, people walked into this...
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Green To Make The Scene
My top is green to make the scene, and although I fight my bottom is always white. I'm long and slender, but not real tender, and I certainly am a fines herbes member. I am the cibol , from Siberia but I'm not so hot as to cause hysteria. My cousins are round and dug from the ground, or very thin and hot within. Some are sweet and cool to eat, but I'm the one who's rolled for fun. If you need some help with your hunches I'm here to inform you I'm sold in bunches. In omelets, salads, and soups I'm fine, and you can also brush or flower me anytime. In vinaigrettes I make a splash, but use me at the end so I don't turn to trash. In pasta salad and seafood too, with all my vitamins I'm good for you. With vitamins C, A and potassium to spare, one drink of my juice will have your intestines in good repair. On sour cream often chopped on top, on nacho platters I hit the spot!
What am I?
The Food Quiz has is brought to you by Culinary Specialty Produce, a specialty produce broker that scours the world for the very best in specialty produce. Contact them at 908-789-4700 or by sending an email to info@culinaryproduce.com.
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