On the second day of the month, $12.50 was spent on directs, $95.00 on stores, and sales were $345.00. On the first day of the month, $35.00 was spent on directs, $102.00 on stores, and total sales were $360.00. However, the inventory used is the actual amount of money that is spent daily on direct supplies or directs (that is, supplies that are purchased and used that day, such as breads and dairy products in many operations) and the value of stores used (that is, the value of the materials already on hand that have been requested and received from the storage area).

If costs are not controlled, the business is likely to fail.ĭaily food costs are calculated much the same way as the basic monthly food costs and the monthly net food costs. Describe Daily Food Cost ControlsĪ month is a long time between reports, particularly if the reports are financial in nature and will determine if the operation is keeping costs under control. Sales have dropped by 6.4%, but food costs have decreased by 10.9%. As long as labour costs have not changed markedly from October, the food cost percentages suggest that this operation copes well with changing sales and is probably in a strong financial position even though demand is down. For example, in some cases, the kitchen might acquire wine or liquor from the bar for cooking or flambéing, and that should be considered a food cost.Īn important line in the chart shown in Figure 16 is the last one, “Food cost %.” In the example, total sales have dropped in November, but the food cost percentage has also decreased. Other adjustments might have to be made to the gross cost of food, depending on how the individual restaurant operates. This cost is best considered a promotional expense borne by the bar. The cost of transferred food should be deducted from the basic food cost figure. This is really an expense of the bar and should not be considered a kitchen expense. In some restaurant and hotel operations, food is transferred to the bar where it is served as as hors d’oeuvre to promote the sale of alcoholic beverages. Again, this expense cannot be ignored, but should be included as a different type of operating expense. The deduction made, remember, is not the menu price but the actual cost of the food to the operation. These include “2 for 1 specials,” coupon discounts, and other promotions. Promotional expenses are also subtracted from the basic cost of food figure. The cost of employee meals should not be ignored, but it might better be considered a labour cost and not a true food cost. For example, if employees are fed or are given a significant discount, the food cost for these meals is usually subtracted from the total found by the basic food cost formula. Some food inventory is used for purposes other than generating direct sales. Adjusting (Credits and Transfers) the Evaluation of Food Costs The information needed to accurately assess the value of inventory is obtained from daily receiving reports (that is, purchases), perpetual inventory cards (that is, inventory records that indicate what is in storage and what supplies have been removed from storage at the request of the kitchen), and by doing a physical inventory.

The value of the inventory is the critical component in deriving an accurate cost figure from the basic formula given above. The existence of a fiduciary duty does not prevent the rise of potential conflicts of interest.For example, if opening inventory is $10 000 and purchases amount to $7500, and the closing inventory (which is also the beginning inventory for the next month) is $9000, then the basic cost of food is:Ĭost of food = opening inventory + purchases − closing inventory There are no guarantees that working with an adviser will yield positive returns. Working with an adviser may come with potential downsides such as payment of fees (which will reduce returns). All investing involves risk, including loss of principal. This is not an offer to buy or sell any security or interest. We do not manage client funds or hold custody of assets, we help users connect with relevant financial advisors. SmartAsset does not review the ongoing performance of any RIA/IAR, participate in the management of any user’s account by an RIA/IAR or provide advice regarding specific investments. SmartAsset’s services are limited to referring users to third party registered investment advisers and/or investment adviser representatives (“RIA/IARs”) that have elected to participate in our matching platform based on information gathered from users through our online questionnaire. Securities and Exchange Commission as an investment adviser. SmartAsset Advisors, LLC ('SmartAsset'), a wholly owned subsidiary of Financial Insight Technology, is registered with the U.S.

Single person food cost per month