Recipe costing is very important because it helps restaurateurs and caterers determine the profit of their business. If you want to succeed and make a profitable business in the food service industry, take note that cost cutting is always the key to boosting the business’ profit. Cutting the cost or assigning a price for every ingredient used can do this. Although this task is not a difficult process, it is time consuming.
To start this process, management should determine the right person for this job. Especially, when it comes to overseeing the project from start to finish. That person must be very knowledgeable when it comes to understanding the recipe costing and its relationship to food costing and profit. Although this coordinator may not be the only person working on the entire project, he or she is responsible for the completion of the task. This includes a complete analysis of the recipe costing system.
Why Recipe Costing?
Why recipe costing has become an important component in running and managing a food service business?
To fully understand the impact of recipe costing on your business’ profit, it helps that you consider the relationship between food cost and profit.
To get the best results, you have to know where your business’ budget is going. The four major expenses are: food, labor, overhead, and profit.
Food expense – Food expense is the cost of the food purchase. Some food service operations also include the drinks and liquors served to your customers.
Labor expense – Labor expense is the overall cost of the labor force (wait and kitchen staff etc) and profit.
Profit – Profit is dubbed as the accrual expense before any sales is made.
Running a food service business should come with an annual sale, profit and expense forecast. As a manager, you have to monitor the daily, weekly, monthly, and quarterly cash flow so you can determine whether or not you’re making a profit. Don’t wait three to six months before you determine if your business is really making good money or not. Even if your business is profitable, you still have to evaluate the profit so you’ll know if your business runs within your expectations.
For costing of your catering recipe and to make the most out of every penny you’re spending, consider the following guide:
1. Compare before buying. Don’t stick to just one vendor. Shop from as many vendors as you can, provided you’re getting the best quality at the right price.
2. Don’t give in to the lowest price. If you know a vendor is trying to woe you because of cheap cost but you know you’re getting an inferior product, don’t hesitate to jump to the next supplier who offers better products at a reasonable price.
3. Keep track of pilferage. You may not know it but pilferage is the biggest reason why you’re losing money. A lot of employees don’t understand the impact of eating your own products without paying for it.
4. To control the food cost percentage, properly portion food according to the right size. Adding 2-3 extra ounces on every serving boost the food percentage. If your customer is getting more food while still paying for less, then you’re losing money!
5. An added tip to keep your recipe costing on the right track: Use a catering software. It’s a miracle to have this handy tool right beside you because it does not only streamline the various aspects of food service, it also saves you more money when it comes to shopping for ingredients, food and wine pairing and much more. Now that’s the best you could do when costing for a catering recipe.