Knowing Your Theoretical Food Cost

Q: Do You Know Your Theoretical Cost of Goods?

Do You Know Your Theoretical Cost of Goods

The Massachusetts Restaurant Association (MRA) and RealFood President Ed Doyle surveyed MRA members on how they execute various operating procedures. When it comes to good restaurant business practices, some members confirmed they follow them, and some admitted they don’t. Find out how you fit into the landscape of best practices.

Theoretical food cost is what, ideally, your food cost should be. In a perfect world, every restaurateur knows what each one of his or her recipes costs, and knows how many of each dish sold. Aggregating these predicted food costs is a powerful tool managers can use to track how inventory is being used.

This number is in flux monthly: it’s dependent on what your sales mix is for the given period. It’s important to know your theoretical food costs and compare it to you actual food costs, because it can illuminate major discrepancies and prompt more accurate food use.

Theoretical food cost is the target you should use to measure kitchen cost management. A target variance of less than 1.5%-2% would be great.