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Improper cooking and re-fires – Proper staff training will reduce waste occurring from improper food preparation Overproduction – This results from a lack of proper forecasting based on a sales history, which increases waste not just in food but also in labor costs Establish a prep sheet with par levels for all food items to help your staff plan production. Production Forecasting-By using sales history to determine production, you can reduce food waste and overproduction. Portion Control-One of the easiest ways to control the cost of food is to establish standardized portion sizes and train employees to use them. Menu Costing – By calculating a per portion plate cost for each menu item, a realistic selling price can be set Standardized Recipes and Procedures –This is done so that there is consistency in production and food costs Kitchen Organization – Establish a standardized system for ordering, receiving, storing, and productionĮmployee Training – Train everyone to follow the system by adopting standardized recipes and procedures that control portions, use trim and leftovers efficiently, and reduce spoilage and waste. These areas can be investigated, and changes can be made to maximize profits. By analyzing the cost ratios, the operator can easily target problem areas.
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Cost to Sales Ratioīecause raw dollar costs are hard to compare from one period to the next, a cost-sales ratio is commonly used and displayed as a percentage of sales. They are usually completed monthly and compared with sales history to determine whether sales and costs are as projected. Income statements show the earnings from the sale of food and beverages and the expenditures on goods, services, and overhead. So food cost percentage is only one factor to consider when determining the menu mix and pricing. If more lobsters are sold, it will bring in more revenue than an equal number of chickens or steaks. Lobster brings in more raw dollars per item and a higher profit margin than soup. Selling 20 soups at a 20% food cost sounds good, but it only brings in a profit margin of $80, while selling 20 lobsters will yield $500. While soup, salads, and chicken have lower-than-average food costs, steak and lobster are higher. This menu mix shows an average food cost of 32%. The mark of a well-managed operation is how close the theoretical and actual budgets come together. This method requires accurate and consistent inventory recording. This is determined by taking a physical inventory and comparing it to actual sales. Setting a budget helps to focus the operation's goals so that the manager and chef can make adjustments as needed to maintain financial stability. The projected budget is an estimate based on sales history and forecasting trends for both sales and expenses of the operation. The menu price would be rounded up to $24 or even down depending on:įoodservice operations will set a theoretical budget with sales goals and projected spending targets for food, labor, and overhead. Menu price based on a 30% food cost the formula: To determine the menu price, use the following formulas. Caterers and banquet operations, because of guest count guarantees and set menus, could have food costs in the 25-30% range. Most sit-down restaurants are in the 30-35% range. Typical food cost percentages run 20-40% of an establishment's overall operating cost. Once a plate cost is established for a menu item, the selling price can be set. These factors must be considered before an actual plate cost can be determined. Other recipes, like the potato pave, will have trim from peeling and cutting the potatoes, plus the waste from portioning them. Some plate costs use multiple preparations, such as the truffle demi-glace in this recipe, which requires the preparation of brown stock and a brown sauce before the small sauce is made. Plate cost includes production trim, waste, and meat or vegetable trimmings. Overall Food Cost Percentage – Based on the monthly cost of food as compared to salesĬalculate each menu item's cost and include all plate components.
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Theoretical Menu Plate Cost – Individual portion cost for each menu item The two ways foodservice establishments use to determine food costs are: Here are a few more ways to control costs. Food costs are tied to properly training your crew so that they can be efficient, control portion sizes, and reduce food waste. But controlling costs is everyone's responsibility, and the chef must convey this message to their culinary team, from the cooks to the dishwashers. Those who are unable will be out of a job quickly. Chefs are managers and must be able to control food costs in the kitchen.