Calculating your restaurant’s cost of goods sold can be as easy as these five simple steps:
- PLAN. Create a recipe for a tasty dish. Without a recipe, you will have inconsistent quality in your food and no way of knowing how much of each ingredient is used each time the dish is prepared.
- BUY. Purchase the ingredients that you need to make the recipe. What you buy is the amount that you increase your inventory of ingredients.
- SELL. Serve your tasty dish to your customers. Each time you sell the dish, your inventory of ingredients used should theoretically deplete by the quantity used in the recipe.
- COUNT. Take inventory of what you have left in stock. What you actually have left on the shelves is the true value of what is left after use, regardless of how many of each item you sold.
- ANALYZE. Review the results and find cost savings. What you should have used is in your perfect or ideal world use, which means the recipe was followed to the letter, nothing spilled, and nothing was burnt or wasted (this NEVER happens). What you actually used is what is actually on your shelves when you take inventory. The difference between what you should have used and actually used is your variance and potential cost savings. This can take the form of waste, theft, spoilage, and more.
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