ONE OF THE MOST INTRESTING SESSIONS IN FOOD PRODUCTIONS. IDEAL FOR ALL THE STUDENTS TO GO THROUGH IT.

1. Bhavin Parekh
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2.  Understanding Food Cost
› The Pizza
› What does it mean to you and your
restaurant?
 Basic Definition of Food Cost
› The Math
› Interpreting the Formula
 Using Food Cost
› Applying Food Cost in day to day operations
› Practical Example
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3.  To be able to define Food Cost and
express the same mathematically.
 To be able to compute Food Cost %.
 To be able to interpret Food Cost %.
 To be able to apply Food Cost % in day
to day operations to maximize profits.
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5. Pizza
1 person gets the whole pizza
i.e. 1 person = 100%
2 persons get half a pizza each.
i.e. 2 person = 50%
4 persons get only a quarter
pizza each. i.e. 4 person = 25%
50%
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50%
25% 25%
25%
25%

6. Rs. 300 Rs. 1000
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Assume that your total sale for the day is
Rs. 1000/-
Your product is food.
In order to produce the food to sell, you
incurred a cost of Rs. 300.
Your net saving at the end of the day
will be Rs. 700 (Rs. 1000 – Rs. 300). This
can also be referred to as PROFIT.
In order to increase your profit, you will
have to reduce the food cost, given
that the total sale is a constant.

7. Food Cost is defined as the cost
incurred to produce the food to be
sold.
This is expressed in percentage (%).
Hence, Food Cost % is
mathematically defined as the
ratio of the cost of food to the
total sales.
It is mathematically expressed as: Food Cost % = Cost of Food x 100
Total Sale
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8.  The food cost is directly proportional to
the cost of food.
› This implies that the higher the cost of
ingredients, the higher will be the Food Cost
%.
› The higher the Food Cost %, the lower is your
profit.
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9.  The food cost is indirectly proportional to
the total sales.
› This implies that higher the sale, the lower is
the cost of Food Cost % and vice versa.
 What is the impact of Food Cost % on
your restaurant’s profit ?
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10. Pizza
The higher the cost of ingredients used
to prepare the dish, the higher is the
Food Cost %.
The higher the total sale, the lower is
the Food Cost % and vice versa.
A higher Food Cost % will eat into a
larger share of your pizza, leaving
you with a smaller piece and vice –
versa.
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11.  The formula.
 The independent and dependent
variables.
 The impact of Food Cost % on profit.
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12. Objective Pricing Methods
 If you want to keep your Food Cost as 40% then:
 Multiplier = 1 / 40%
= 1 / .40
= 2.5
Assume that a Seafood Platter has a
Standard Food Cost . Portion of a Seafood
Platter is $ 5.32
 If a Food Cost % of 40% is desired:
 Base Selling Price (B.S.P.) = $ 5.32 x 2.5
= $ 13.30

13. Assume that a Seafood Platter has a Standard Food
Cost / Portion of a Seafood Platter is $ 5.32
 If a Food Cost % of 40% is desired:
 Base Selling Price (B.S.P.) = $ 5.32 x 2.5
= $ 13.30

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