bake - February 2019 - 38
Food Cost Percentage = (Beginning Inventory + Purchases - Ending Inventory) ÷ Food Sales
Beginning Inventory = $15,000 //// Purchases = $4,000 //// Ending Inventory = $16,000
Food Sales = $10,000 //// Food Cost Percentage = (15,000 + 4,000 - 16,000) ÷ 10,000
Food Cost Percentage = 3,000 ÷ 10,000 //// Food Cost Percentage = 0.30, or 30%
According to the National Restaurant Association,
menu in-house, so you can easily reprint it if your costs
making sure the price is right for each menu item is
suddenly soar. "If your menu looks the same, your guests
no game. Before adjusting your prices, consider the
probably won't notice the price change," she says.
following factors:
Competitors' prices
Food costs
When was the last time you dined at a competing
"You've got to know your costs before setting a price,"
restaurant? If it's been a while, you're missing crucial
says restaurant consultant Linda Lipsky of Broomall,
information that can help you set your prices. Find
Pennsylvania. She recommends that food costs run
out what your competition offers and their price
about 33% of menu prices, on average. This can differ
points. Don't look just at online menus, Lombardi
per operation, with fine dining restaurants typically
urges. Go in person so you can see the portion sizes,
posting higher food-cost percentages and casual
the preparation, the presentation - all factors that
pizzerias running lower percentages. The percentages
impact the value perception.
also vary widely from item to item. "A soup could cost
as little as 18 cents per serving to make, but you're not
Pricing strategies
going to sell it for 54 cents," Lipsky says. Soups, appe-
Pricing products correctly starts with your cost to
tizers, desserts and alcohol tend to have lower cost
make them. Take a lesson from successful retail
percentages than entrees, she notes. Consider your
bakery owners who command much higher premiums
sales mix when pricing items.
from their products. Founder and owner Susan Sarich
of SusieCakes, now with 24 locations in California and
Margins
Texas, explains that her pricing philosophy is simple
Food-cost percentages are only part of the equation.
and effective: "I believe that quality is remembered
"The biggest mistake I see operators make is that
long after price is forgotten," she says. "We price
they rely too much on food-cost percentages and not
according to the costs associated with operating our
enough on food-cost margins," says Dennis Lombardi,
business.
president of Insight Dynamics LLC in Columbus, Ohio.
By nature, scratch baking is extremely labor intensive
Additional costs
and can be a more expensive operation to run than
Don't forget to factor in your labor costs. The cost
other bakery models. We offer a very fair price for
of baking and decorating a chocolate cake in-house,
a premium product, which allows us to appeal to a
rather than buying it premade, is more than just the
broad audience. Having a wide variety of decoration
price of the ingredients. Include the price of any
options also allows us to appropriately charge for the
giveaways, such as bread and olive oil, and the cost of
amount of time that goes into our hand-decorated,
food waste and spoilage.
custom designs."
Volatility
Profitable bakeries and bakery cafes tend to keep food
Food costs can change at a moment's notice, based
costs between 28 and 35%. This is an estimate and can
on anything from world politics to weather condi-
vary depending on the types of products your bakery
tions. While large chains might sign contracts that
sells. But it is a great starting point to use as an effec-
lock in prices, smaller restaurants usually don't have
tive measuring stick.
that option, Lombardi says. "Give yourself a cushion
for volatile items," he notes. Limit items, particularly
Start with a defined time period over which you are
those with volatile ingredients, to specials or seasonal
going to calculate food costs, say 28 days. Include all
dishes, he advises. Lipsky recommends printing your
food and beverage expenses in your percentage.
38 < FEB 2019 | bakemag.com
http://www.bakemag.com
bake - February 2019
Table of Contents for the Digital Edition of bake - February 2019
bake - February 2019
Editor's Note - THE WHOLESALE ISSUE: achatz “pies that fly”
Contents
Management - Top Trends For All
Technical Corner - CAKE Efficiency
Practical Marketing - The Delivery Challenge
Equipment Innovations - Earn More Dough
Pies that Fly
Perfect Pan Pizza
The True Cost of Food
Chocolate & Decorating - Making Sustainable Chocolate THE NORM
Cakes - Start Your Own Trends
Sweet Goods - Plant-Based Food Dyes & Sprinkles
Breads - Launching a New Chapter
Pastries - Growing with the NEIGHBORHOOD
THE BREAD BAKERS GUILD OF AMERICA Calendar
Foodservice - What's Hot On The Menu
Product Showcase
Classifieds
Ad Index
Formula of the Month - Herbed Tomato and Pesto FOCACCIA
bake - February 2019 - bake - February 2019
bake - February 2019 - bake - February 2019
bake - February 2019 - 2
bake - February 2019 - Editor's Note - THE WHOLESALE ISSUE: achatz “pies that fly”
bake - February 2019 - 4
bake - February 2019 - 5
bake - February 2019 - Contents
bake - February 2019 - 7
bake - February 2019 - Management - Top Trends For All
bake - February 2019 - 9
bake - February 2019 - Technical Corner - CAKE Efficiency
bake - February 2019 - 11
bake - February 2019 - Practical Marketing - The Delivery Challenge
bake - February 2019 - 13
bake - February 2019 - Equipment Innovations - Earn More Dough
bake - February 2019 - 15
bake - February 2019 - Pies that Fly
bake - February 2019 - 17
bake - February 2019 - 18
bake - February 2019 - 19
bake - February 2019 - 20
bake - February 2019 - 21
bake - February 2019 - 22
bake - February 2019 - 23
bake - February 2019 - 24
bake - February 2019 - 25
bake - February 2019 - Perfect Pan Pizza
bake - February 2019 - 27
bake - February 2019 - 28
bake - February 2019 - 29
bake - February 2019 - 30
bake - February 2019 - 31
bake - February 2019 - 32
bake - February 2019 - 33
bake - February 2019 - The True Cost of Food
bake - February 2019 - 35
bake - February 2019 - 36
bake - February 2019 - 37
bake - February 2019 - 38
bake - February 2019 - 39
bake - February 2019 - Chocolate & Decorating - Making Sustainable Chocolate THE NORM
bake - February 2019 - 41
bake - February 2019 - Cakes - Start Your Own Trends
bake - February 2019 - 43
bake - February 2019 - 44
bake - February 2019 - 45
bake - February 2019 - Sweet Goods - Plant-Based Food Dyes & Sprinkles
bake - February 2019 - 47
bake - February 2019 - Breads - Launching a New Chapter
bake - February 2019 - 49
bake - February 2019 - Pastries - Growing with the NEIGHBORHOOD
bake - February 2019 - THE BREAD BAKERS GUILD OF AMERICA Calendar
bake - February 2019 - Foodservice - What's Hot On The Menu
bake - February 2019 - 53
bake - February 2019 - Product Showcase
bake - February 2019 - 55
bake - February 2019 - Classifieds
bake - February 2019 - Ad Index
bake - February 2019 - Formula of the Month - Herbed Tomato and Pesto FOCACCIA
bake - February 2019 - 59
bake - February 2019 - 60
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