Enthusiasm for learning foodservice relevant match is required if chefs and buyers are to work together to impact the bottom-line for restaurant operations. Mastering math is key for individuals wishing to manage purchasing priorities for the multi-unit brands.
For example, do you buy ribs by the rack or by the pound? Pickles by the case or count? Do you value wings (dummies to flapper ratio), case weight or case count? Buy fry oil il by the case price or cost per day fry life? Use the whole fish price, dressed fish or portion? Bacon by the slice, case weight or yield? French fries by portion cost and yield or per lb. ? The majority of mulit-unit brands we consult with have purchasing staff that can score 100% on this quiz; so yes-foodservice buyers are smarter than 5th graders!
Today’s corporate F&B buyer also has to master the fundamentals of food cost, product yield (food preparation / production), and be capable of calculating the total-cost-of-goods “farm to plate” to succeed in negotiating below market prices with manufacturers. Let’s take time to review the foodservice math fundamental. What is food cost and how do we find its percentage?
Food cost percentage is the cost of the food as it relates to the dollars received in sales. For example, If Gruby’s New York Deli sells a pastrami sandwich for $5.00 and wants a food cost of 27% the cost of food must be $1.35.
Finding Food Cost Percentage to find the menu item food cost percent simply divide Gruby’s New York Deli’s menu price of the pastrami sandwich into the cost of goods used to prepare it. To find the food cost for the restaurant add the total cost of food and divide by the total sales, i.e.: Cost of Food / Total Sales = Food Cost Percent.
More advanced math is required to manage delta models, calculate the impact of price changes on the future cost-of-goods, and apply spend analytics to cost reduction initiatives. Our consulting firm and most Fortune 200 restaurants develop purchasing plans as part of the corporate budgeting process to refine the balance between income and expenses.
We are all reminded in tough economic times that manufacturers are risk adverse, which means shorter contract terms, longer lead-times and generally higher prices! There is more to managing a purchasing department than planning orders, checking the accuracy of invoices and signing up for food show specials. Do the math better than a 5th grader and you will be promoted to the next higher level of purchasing performance.
To Higher Profits!
Fred
Fred Favole is Founder/President of Strategic Purchasing Services (SPS), a consulting firm specializing in purchasing department outsourcing, interim management and distributor program (MDA) warehouse audits. His contact information; e-mail SPS@Gate.Net phone 912.634.0030 Follow Fred’s Blog: https//purchasinginsights@blogspot.com
