Food and Beverage Product Cost Analysis

 

Food Cost and Beverage Cost are two of the main drivers of your profitability or lack thereof.

When they are too high, they eat into your profits. You can only raise your prices so much before your customers begin visiting your lower priced competitors.

Your product costs should be in the following ranges:

• Food Cost: 30 - 35%
  
• Liquor Cost: 20 – 25%
  
• Beer Cost: 20-25%
  
• Wine Cost: 25-35%

If they are above these targets, you’ve got real problems!  Potential causes of your problems:

• Employee Theft,
  
• Over-portioning,
  
• Spillage,
  
• Excessive Waste,
  
• Spoilage,
  
• Too generous with employee meals,
  
• Too many comps.

What I can do:

• Secret shop your operation to determine whether employees are giving away your profits.
  
• Trace your cash from the cash register to the bank to ensure all cash is going into your pocket and not those of your employees.
  
• Analyze your Food Cost, Liquor Cost, Beer Cost, and Wine Costs to determine why they are so high.
  
• Put procedures in place to track your highest cost food products to ensure they are not walking out the door.
  
• Ensure your storage areas are secure from theft.
  
• Observe your kitchen staff and bartenders to ensure they are serving standard portions.
  
• Put procedures in place to track the cost of waste, spoilage, employee meals, and comps.

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