If you haven’t looked at menu pricing vs. supply costs in a few months, you might be losing money. Here’s how to analyze Cost of Goods Sold (COGS) from your restaurant bookkeeping down to plate-costs—including a free Google Sheets template.
How profitable is your menu today? In a post-pandemic world where restaurant supply chains are still heavily disrupted, it’s critical to regularly assess your menu-costing to ensure that you’re still making money on every dish that goes out the door.
Restaurant bookkeeping normally results in a Profit & Loss (P&L) report that breaks down your Cost of Goods Sold, or COGS—but this isn’t enough! Plate cost changes are a really common problem, especially in a post-pandemic economy, sneaking up on even the most seasoned operators. This is especially true if it’s been more than a few months since you last checked your supply prices vs. plate costing and menu pricing. Changes in transportation costs, consumer preferences, labor availability, and more can easily cause some of your top menu items to pull down your profits.
The good news is that you are likely just a few small tweaks from turning them back into profit-drivers. Keep reading to learn more, and get access to a free Google Sheets template to get insights in 30 minutes or less on how to improve your plate costs and restaurant profitability. We provide a simple spreadsheet-based calculator to help you get the job done, no special software needed. You won’t need to weigh spices or salt, so don’t panic! Let’s cover the basics before we jump in.
Menu costing is the process of determining the cost of each menu item offered by a restaurant. It involves calculating the expenses incurred in preparing a particular dish, including the cost of ingredients, labor, and overhead, to arrive at the total cost of production. Menu costing helps restaurant owners and operators understand the profitability of their menu items and make informed decisions regarding pricing, portion sizes, and menu engineering.
If you haven’t costed out your top menu items in over a month, this is for you. If you don’t track prices of your top-purchased ingredients and then make adjustments, this is definitely for you. If you’re interested in getting more insight into what your restaurant bookkeeping can tell you, this article is also for you.
Yes, it can be—but it doesn’t have to be! As a restaurant owner or chef, you’re super busy and don’t have time to count every ounce of salt and pepper so we wanted to share a realistic approach that will still get you 80% of the benefit WITHOUT weighing salt. This blog post is about helping you start small with the biggest levers.
Our team has used these approaches to run multiple restaurants for decades at up to—and beyond—20% profit. Hone’s restaurant bookkeeping software helps you better manage your books, so you can increase profitability and operational efficiency at your restaurant.
To start, let’s talk about plate-cost targets. The generally accepted target for overall food cost as a % of food sales is 30%. We recommend targeting closer to 25% for plate-costing so that you have some buffer for comps, mistakes, portioning, etc. Here’s an example to illustrate the value of correctly costing out your top menu items. The calculator that follows will walk you through each step in doing this calculation.
Let’s look at an example of how this works for a fried chicken plate.
Depending on the size of the adjustment that you need to make, there are several strategies that can be employed. Here are a few suggestions:
Ready to review your menu for profitability? Simply follow this recipe—gather up your recipes, your recent invoices from your restaurant bookkeeping, and use our free calculator to see where your menu is losing (or making) the most profit:
Need help improving your profit margins? Contact Hone below for a free consultation. We will walk you through the menu pricing calculator and also talk about other ways that we help our restaurants improve their profit margins through our restaurant bookkeeping software designed specifically with your needs in mind.