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CHThe food cost formula helps to calculate the food cost percentage, which is essential for controlling expenses in a kitchen or food business..
The food cost formula, often expressed as a percentage, helps businesses understand how much they're spending on ingredients relative to their revenue. The basic formula is: Total Food Cost Percentage = (Total Cost of Goods Sold / Total Revenue) x 100. This helps determine if menu prices are adequate for profitability..
Food Cost Percentage Formula:
Food Cost %= Beginning Inventory+Purchases−Ending Inventory divided by Total Food Sales
Breakdown :
Beginning Inventory : Value of all food items at the start of the period.
Purchases : Total value of food bought during the period.
Ending Inventory : Value of food items left at the end of the period.
Total Food Sales : Revenue earned from selling food during the same period.
Example:
Beginning Inventory = ₹10,000
Purchases = ₹25,000
Ending Inventory = ₹8,000
Total Food Sales = ₹50,000
Food Cost %=10,000+25,000−8,000 /50,000×100=27,000/50,000×100=54%..
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