You must cost out each recipe for each menu item. Don t forget to include things such as spices and garnishes in the recipe cost. After you have determined total recipe costs for items and sales prices, you can determine if your food cost is in line with industry averages. Sources for industry averages include The RAS Report, a report on restaurant industry operations published annually by RAS and the National Restaurant Association annual report. Monitor your food cost and compare it to previous performance and industry averages.
Consistent analysis can prove very helpful in identifying problems and trends.
It is important to determine why food costs increase as well as decrease. Ideally you should be able to determine a consistent overall food cost which, when combined with properly pricing your food menu items, positively impacts your profitability. Other Costs of Operation Keep in mind there are other costs of operating a restaurant that a customer does not notice that need to be factored into the mix to determine optimal pricing for menu items. These costs such as labor, rent, and debt service will be discussed in greater scope in the second part of this article. Successful restaurants generate beverage costs in the mid-20 percent range of Beverage Sales.