Have you ever wondered what the actual cost of goods sold calculation is for your restaurant? It may be the most important calculation you make in your restaurant. Watch this video to learn why this is true and what the basic cost of goods sold formula is for restaurants.
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About David Scott Peters: a restaurant management expert and founder of TheRestaurantExpert.com. He offers independent restaurant owners restaurant management tips, coaching and a software that will revolutionize their business operations and their profits.
About that cost of goods sold calculation ...
Knowing your cost of goods sold could be the one of the most important things you measure in your business. To do it correctly, you have to have the right numbers and the right equation.
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These videos cover ways to take action in the restaurant today to be more efficient and profitable. Whether you’re looking for ways to cut and control food costs, trying to stabilize your labor costs, or you’re interested in building a management team that actually manages, these tips will help you.
David teaches real solutions to the biggest – and smallest – challenges in independent restaurants. Watch this video and then take action!
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Video Notes on How to Calculate Restaurant Cost of Goods Sold:
So what is the right equation? How do you do it?
Start with your beginning inventory - what was on the shelves the last time you counted. You should be taking inventory weekly - monthly at the minimum. (Only the food and liquor.)
Add to your beginning inventory your purchases. Earn, owe, use - accrual accounting.
This gives you a total - how much you have on your shelves that you could sell.
At the end of the period you're measuring - preferably one week - you take an ending inventory. This gives you your product used.
What is used? Sold, waste/spoilage, theft and comps.
Use is blind - where it has gone has to be measured. To do this, divide your produce used by sales to get your cost of goods sold percentage. This is your food cost and/or pour/liquor cost.
If you come up with a 30% food cost, that means for every dollar in food sales that came in, I used 30 cents in product to bring that dollar into the business.
Restaurant cost of goods sold is a vital part of your business, piece of information you must know, to control your bottom line.
