There is a huge array of information associated with food cost control, so much so that managing your food cost can be as elusive and mysterious as the legendary Dragon Fish. To get a handle on the complexity of the challenge facing chefs, read the Forty Thieves of Foodcost article for a primer on the various issues related to managing your operation’s culinary bottom line. To help in the fight of controlling your food budget Chefs-Resources provides a number of food cost tools including free prep worksheets, formulas, explanations of applied food cost tools/valuations, and so on. Be sure to check out the free Declining Balance Worksheet, our explanation of Inventory Turns, and the very useful Excel Food Cost Calculation File which is available for free download.
Month End Inventory and Food Cost
Managing your food cost also has a lot to do with managing your end of month inventory. Do you count items by the sheet-to-shelf or by the shelf-to-sheet method? Which one is better? We explain the difference in Taking Inventory.
Are all of your food credits and transfers entered correctly? Do you track them?
Do you verify the information on your month end inventory balance sheet? This is extremely important if you want to be on top of your game in controlling your month end inventory accuracy.
Do you leave your food cost fate in the hands of the accounting department? Or do you verify their numbers (never trust someone else with your fate, always know your numbers). Use the Food Cost Calculation File (free download) to track all of your month end numbers and verify the numbers which accounting has.
The inventory food cost tool is an Excel sheet which will calculate your period end inventory. End of period (usually either weekly or monthly) Food Cost Calculation is as follows:
(Beginning Food Inventory + Purchases + Transfers In – Transfers Out – Credits – Ending Food Inventory) / Sales
- Beginning Food Inventory is the value of the food you had at the beginning of the period, which generally is also your ending inventory for the previous period.
- Purchases is new food purchases for this period (do not include paper, chemicals, equipment, etc…only food purchases)
- Transfers In is for establishments which transfer product from one venue to another, or perhaps from the bar to the kitchen
- Transfers Out is product transfered to another venue, or perhaps to the bar
- Credits can be a variety of things including vendor credits for bad/wrong product, marketing credits, rebates, etc
- Ending Food Inventory is the value of your food inventory at the end of the period
- Sales is your food sales
Sales may be either Food Sales only -or- Food & Beverage Sales depending upon your operation’s accounting method.
Click to download this free Excel Food Cost Calulator. Fill in the blue spaces and the math is calculated for you.
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