Taking into consideration the cost of the food you eat is crucial to understanding how much money you spend on it. For businesses however, this is even more important and vital, as it can determine the amount of revenue they are bringing in, given that they are restaurants. In doing so, often times measuring actual food costs as opposed to theoretical food costs can grant a better understanding of the process it takes to cook and serve the food, and may ultimately save many restaurant-owners a great deal of money when implementing it.

Key Takeaways:

• the most useful reports a back office can generate is the Actual vs. Theoretical food cost report.
• The Theoretical food cost report is calculated by taking the prices paid for each ingredient x Amount of each ingredient in each recipe x Menu Mix (how many of each recipe was sold). The Actual is calculated by taking the beginning of week inventory values + Additional inventory purchases – End of week inventory values = your actual food cost
• The next goal is to use available reporting tools to find and eliminate the source(s) of the excess cost. The restaurant software helps by bringing the entire enterprise more operational discipline and efficiency while seriously impacting your bottom line food and labor cost savings by 2-5% or more.

“Restaurant management software has many benefits, but one of the most useful reports your back office solution can generate is the Actual vs. Theoretical food cost report.”

http://nrn.com/back-office-solutions/hidden-food-costs-are-killing-your-profits