Use the Cost of Sales Spreadsheet to monitor your restaurant or bar’s performance.
Also, there are two versions of the Cost of Sales spreadsheet:
- Food Cost of Sales Spreadsheet – Scroll down to the bottom of the page
- Food and Alcohol Cost of Sales Spreadsheet – Scroll down to the bottom of the page
At a glance, you can view the food and alcohol cost percentage. You will also be able to view how much product you go through during specific time periods.
Cost of Sales Spreadsheet
These systems are simple to use – input the following:
- Daily Revenues Cost of Sales Spreadsheet
- Beginning Inventory Dollars
- Ending Inventory Dollars
- Numbers of Days your Business is Open in a Week
Food and Alcohol Percentages
In order to profit you need to have both your food and alcohol cost percentages in line with your projected percentages. Each business is different. However, the restaurant industry rules-of-thumb are to achieve a 60% prime costs. Knowing your prime cost can provide a valuable starting point for monitoring and understanding your restaurant’s performance. There are exceptions. Here are a few benchmarks we’ve found to be useful when working with restaurant owners and managers.
How Food and Labor Costs are Calculated
Food and labor costs are calculated as a percentage of the total volume of sales. If a restaurant does $20,000 per week and the total cost of food and beverages is $7,000 for that week, then the food cost is considered 35%. If the same restaurant has $5000 in labor including payroll taxes and benefits, then the labor cost is 25%. Total prime costs are 60% in this example.
What Are the Ranges?
Some fast food restaurants can accomplish a cost as low as 25%. In contrast, sit down service restaurants may see labor in the 30% to 35% range. Food costs for restaurants run typically from the 25% to 38% range, depending upon the style of restaurant and the mix of sales. That includes beverage costs.
Look at Prime Costs to Determine Success
In order for your restaurant to profit, aim for prime costs in the 60% to 65% range. How you break down between food and labor is less important than accomplishing a prime cost maximum that produces a decent profit. So, if one of the prime costs is in the higher range, the other prime cost must be in the lower range in order for you to profit. Remember it is the combination of food and labor that creates the bottom line.
Alcoholic Beverage Costs
Liquor, beer and wine costs will vary among restaurants due to a number of factors, but here are typical costs in percentages:
- Liquor –18% to 20%.
- Bar consumables –4% to 5% as a percent of liquor sales.
- Bottled beer –24% to 28%.
- Draft beer –15% to 18%.
- Wine –35% to 45% (the cost percentages of wine can vary dramatically from restaurant to restaurant depending primarily on the type of wines served. Generally, the higher the price per bottle, the higher the cost percentage).
NOTE – All percentages above are the ratio of each item’s cost divided by its sales, and not total sales or total beverage sales.
For example, liquor cost percentages above are based on liquor costs divided by liquor sales. This applies to the non-alcoholic beverage costs discussed below as well.
Non-alcoholic beverage costs:
Typically, it has been a standard industry practice to record non-alcoholic beverage sales and costs in Food Sales and Food Cost accounts. However, we’ve found that many owners and managers are now breaking out non-alcoholic beverage sales and costs and report on them separately as “Soft Beverages.”
- Soft drinks (post-mix) –10% to 15%.
- Regular coffee –15% to 20%.
- Specialty coffee –12% to 18%.
- Iced tea –5% to 10% iced tea is the low food cost champ of all time. Cost of the tea can be less than a penny per glass. Biggest cost component in iced tea is usually the lemon slice.
If your costs are running higher than the averages above, maybe take the time to investigate some things. Your menu pricing, beverage controls and the possibility of theft impact your profits. We can help with any questions regarding your costing of items. In addition, a Point of Sale system that can effectively track a perpetual inventory system is a MUST nowadays to maintain profitability.
Of course, there may be other issues going on in your business to decrease your profit margins. That’s why Workplace Wizards is here. Let us help you determine where your restaurant is losing money and maximize your profits.
Food Cost of Sales Spreadsheet