Definition of the cost price of a recipe: The cost price of a recipe represents the cost of the raw materials necessary to produce your recipe.
For a company such as a restaurant, it is essential to have control over costs.
There are two different ways to calculate the cost price of a recipe. The first, by theoretically calculating with the data sheet and weighing all the ingredients. The second by dividing the total cost of purchases by the number of portions served. Of course, it all depends on the type of kitchen, the type of restaurant and the size of the establishment you manage.
In addition to calculating the cost price of recipes in a restaurant, the margin must be taken into account in order to set the selling price.
Some restaurant owners use Excel software but this version has its limits. In fact, it is more professional to use a restaurant management software. This software allows you to create a much more advanced version of the recipe card.
The management of material costs is essential in calculating the cost of recipes in the kitchen.
On excel you can list the different food costs needed for your production. Excel templates that you can download exist but they are very limited for a business like a restaurant.
There is a quick way to choose the right solution, each with its advantages. The data sheet method is more rigorous and allows you to anticipate future price changes. The other solution is done retrospectively, because you need to know what you have spent and how many servings you have served before you can calculate. It is also closer to reality.
Let's take a detailed look at these two techniques for calculating gross margin.
The detailed data sheet
Data Sheet Table
|Denrées||Supplier||Quantity||Packaging (unit)||Unit Price excl. VAT||Total cost excluding VAT|
Total cost of the X portion: 8 €.
Cost per portion: €0.80
Number of servings of the preparation: 10
- Weighing the ingredients
- Wash, peel
- Cutting - Trimming
Photo of the dish
In this technique, a sheet can be drawn up which will serve as a manufacturing procedure for the cooks. It thus makes it possible to ensure constant quality and to monitor deviations.
It simply consists of weighing all the ingredients in the recipe and multiplying them by the unit cost of each ingredient.
The card is established for a number of potions (or shares).
To obtain the unit cost of the dish, divide the total previously calculated by the number of portions.
This method therefore requires the preparation of one card per dish, a meticulous and time-consuming task.
Stock removal method
This method may seem less rigorous but it is more accurate (in terms of portion cost) than the first. Data sheets can be used in conjunction with this solution for greater rigour.
Here, to obtain the average cost of the portion we divide the total cost of consumption by the number of place settings served. The calculation seems simpler, but it is more important to make sure that the cooks know the specific techniques and methods of the restaurant.
How to apply this method every day?
This method is often used in institutions or restaurants that vary their menu every day. It is also used in buffet restaurants where you do not know what the guests are choosing
This simple method is used on an ad hoc basis. But when it has to be applied every day, taking into account stocks, strict monitoring of consumption must be put in place.
The first step is to record the "stock removals" of the day.
Then we note the number of covers per day or service.
Only the division remains to be done.
Method for calculating the cost price of a recipe
To establish the number of portions is simple but let's see in more detail how to manage the "out of stock".
We just imagine that there are two physical premises:
- a reserve with the ingredients or foodstuffs in stock.
- the kitchen where the food is prepared.
As soon as the cook takes a product from the reserve (stock) to the kitchen to prepare his daily menus, he notes them on a "out of stock" register.
This register is used to total the "stock removals" of the day or department.
If a cook takes out a 10kg bucket of salt, he notes it entirely on the register, even if he only uses 200 grams.
The method is therefore not ultra-precise, but these imperfections are smoothed over time. (the rest of the salt will be consumed the following days). The calculation of the cost price of a recipe in the kitchen is however closer to reality than the previous method.
Conclusion of the cost price calculation recipe
So we can see that the second technique is not very suitable if you want to anticipate your expenses, establish selling prices or forecast price increases. On the other hand, it is more suitable for large volumes.
The data sheets are very theoretical and you have to readjust them continuously to take into account losses and wastage. This technique also makes it possible to better follow slips in the kitchen.
If you see a significant cost overrun or if your margin deteriorates, you can easily identify the commodities involved.
Example: you can identify a significant loss on smoked salmon by comparing the quantities purchased to the quantities theoretically consumed.
Excel template for data sheet to download at the end of this article | Koust food cost software
Cost price and selling price
In catering, recipe management can be complex to organise. A food cost software allows you to manage your ingredients and food products and also to generate an advanced version of the technical sheets. These are available as excel or pdf downloads. The food cost corresponds to the cost of recipes in the restaurant business.
In addition, restaurant software such as Koust helps you analyse your menus and take corrective action to create an attractive menu for your customers.
By highlighting your most profitable and popular dishes you can increase your margin.
The next step is to understand how to price the product.
Pricing is not a random process. It requires identifying the purchase prices of the ingredients per unit and multiplying them by the quantity in the recipes.
When calculating the selling price of the restaurant's receipts, it is essential to apply a margin rate in order to ensure the proper management of the business. The costs of the dishes on a menu depend on the quantity of foodstuffs used, the purchase price of these products and also the production time required to prepare the dish.
In the restaurant business, the gross margin should be 70%. This represents the selling price of the product, minus the 30% of material costs necessary to produce your dishes.