Recipe Costing

Chapter 7: Recipe CostingRecipe CostingMethod used to determine the profit on food productsTo obtain and maintain maximum profit, a foodservice operation must be aware of four expenses:FoodLaborOverheadProfitFundamentals of Menu Planning 3rd edition. (McVety, Ware and Ware) John Wiley & Sons, Inc. © 2009Guidelines for Achieving a Greater ProfitBuy comparatively.Do not always purchase a product with the lowest price. Keep track of pilferage. Train employees properly to will help reduce food cost. Portion food in its proper portion size to control the food cost percentage.Forecast accurately. Fundamentals of Menu Planning 3rd edition. (McVety, Ware and Ware) John Wiley & Sons, Inc. © 2009How to Cost out a RecipeOnce a recipe has been selected, it needs to be recorded in a format that is easy to use. The form should include:A. Recipe nameB. Recipe identification numberC. Portion sizeD. Yield or number of portionsE. IngredientsF. Waste percentageG. Edible portion (EP)H. As purchased (AP)I. Unit purchase priceJ. Conversion measureFundamentals of Menu Planning 3rd edition. (McVety, Ware and Ware) John Wiley & Sons, Inc. © 2009How to Cost out a Recipe Cont’dK. Ingredient costL. Preliminary subtotal recipe costM. Q factor of 1 percent (Place percentage in this box and then multiply theQ factor % by the preliminary subtotal recipe cost.)N. Q factor costO. Subtotal recipe cost (Add Q factor cost to the preliminary subtotal recipe cost.)P. Portion cost (Divide the subtotal recipe cost by the total portions/yield.)Fundamentals of Menu Planning 3rd edition. (McVety, Ware and Ware) John Wiley & Sons, Inc. © 2009How to Cost out a Recipe Cont’dQ. Additional cost (If this is an `a la carte menu item, leave this box blank; if not, place the portion cost of the other menu items in this box.)R. Total recipe cost (Add any additional cost to portion cost; if there are no additional costs, the portion cost becomes the total recipe cost.)S. Desired overall food cost percentage (Retrieve this number from the annual profit and loss statement.)T. Preliminary selling price (Divide the total recipe cost by the desired food cost percentage.)U. Adjusted/actual selling price (based on what the customer is willing to pay)V. Adjusted/actual food cost percentage (Divide the total recipe cost by the adjusted/actual selling price.)Fundamentals of Menu Planning 3rd edition. (McVety, Ware and Ware) John Wiley & Sons, Inc. © 2009Recipe Costing SoftwarePrograms offer the following advantages:The amount of time they saveIncreased accuracyThe detailed reports that they are able to generatePackages all for the following uses:The generation of a list of inventory ingredients and their costA summary of ingredient quantitiesA file storage system of the method of preparation of recipesA calculation of recipe costs and food costs percentagesThe ability to convert recipes to increase or decrease the yieldFundamentals of Menu Planning 3rd edition. (McVety, Ware and Ware) John Wiley & Sons, Inc. © 2009