How Much Does a Pound of Beef Cost at Target
Nutrient Costing
xv The Principles of Bill of fare Engineering
Although you lot likely have a target overall food cost in your establishment, not every carte du jour detail will behave exactly the aforementioned nutrient toll percentage. Some items are more plush than others, but most establishments will have a range of prices that all the bill of fare items fit into. Consequently, it is important to residual the menu so that the depression and high food cost items piece of work together to help you lot reach your target food cost. This process is called carte engineering science. means balancing the high and low food toll items; it besides includes strategically featuring or promoting items to help reach your targets.
Calculating Menu Item Costs
The cost per portion derived from yield tests washed on the chief ingredient of a carte detail usually represents the greatest function of the cost of preparing the item (meet the section higher up on yield tests for more than information).
Even so, of equal importance is the portion price factor. For case, the portion price factor tin can be used to determine the price of a portion of the main ingredient regardless of the price of the meat (which is often the main price factor) charged by the supplier as long as the eating house's preparation of the meat remains unchanged. The price per portion is determined by multiplying the portion cost factor by the packing firm's price per kilogram (or pound).
Quite often the price per portion of the main ingredient is used by itself to determine the selling price of a menu item. This works well with items on an à la carte card every bit the basic main ingredient (such equally a steak) is sold by itself and traditional add together-ons (such as a baked potato and other vegetables) are sold separately.
Equally discussed earlier in this volume, in many cases, some of the components will be the same, so a basic plate cost tin can exist used to add to the cost of the main protein to go a total price for the dish.
In dishes where the main ingredients are non sold as entities just as role of a prepared dish, the price of all the items in the recipe must be determined to find an accurate portion toll price. In this case, a recipe detail and cost sail is used to decide the toll price of carte items. (Refer back to the department on costing individual menu items for more than information.)
One time the potential cost of a card item is determined, the selling price of the particular tin can as well be calculated by using the food cost percentage.
Nutrient Cost Percentages
Every bit you may call up, food cost percentage is determined by dividing the portion toll by the selling price:
nutrient cost percentage = portion cost ÷ selling price
If the portion cost is $4.80 and the selling price is $fourteen.00, the food price percentage is:
food cost percentage = portion cost ÷ selling cost
= $4.eighty ÷ $14.00
= 0.34285
= 34.285%
= 34% (rounded off)
Another way of expressing the food price is as a cost marker-up.
The toll mark-up is determined by reversing the food toll percentage equation:
cost mark-upwards = selling price ÷ portion cost
The cost marking-up can also be determined past dividing the food cost percentage into 1. The equation then becomes:
cost mark-upwardly = 1 ÷ food cost percentage
In the example higher up, where the portion price is $1.twenty and the selling price is $3.50, the cost marker-up can be solved in the following means:
cost marker-up = selling price ÷ portion price
= $14.00 ÷ $four.fourscore
= 2.9166
= 2.92
or cost mark-up = ane ÷ food cost percentage
= 1 ÷ 34.285%
= 1 ÷ 0.34285
= 2.91674
= 2.92
The cost marker-up can be used to determine a selling toll when a portion cost is known by multiplying the cost mark-upward and the portion toll:
selling toll = portion price × price marker-up
For example, if the ingredients for a portion of soup costs $1.05 and the restaurant has a cost marking-up of 3.6, the menu price of the soup is:
selling cost = portion cost × toll mark-up
= $1.05 × iii.6
= $3.78
The eatery would charge at least $iii.78 for the menu item if it wants to keep its mark-up margin at 3.6, which is almost a 28% food price percentage. This price might be adjusted because of competition selling the same item for a different toll, price rounding policies of the restaurant or the whims of direction. For example, many restaurants have prices that terminate in 5 or 9 (such as $4.99 or $5.95). Prices on such menus tend to be rounded to the nearest number ending in five or 9. No affair what the final carte price is, at least a base price has been established.
The problem with the above approach is it doesn't explain how to select a food percentage or a selling price from which to derive the percentage. In many cases, the food percentage is based on by experiences of the manager, or by a supposed sensation of industry averages. For instance, many people simply ready their nutrient pct at 30% and never work out a more than advisable effigy. Similarly, the selling cost of a carte particular is often the production of guessing what the market place will bear: $4.fifty for a bowl of soup may seem similar a proficient bargain or as much equally a reasonable person might pay in that restaurant. Unfortunately, none of these methods takes into business relationship the unique situations affecting most restaurants.
A more accurate way of computing a target food cost per centum is to estimate total sales, labour costs, and hoped-for profits. These figures are used to determine immune food costs. The total of projected food costs is divided by the projected sales to produce a food toll percentage. The food price percent tin can be turned into a mark-upwards margin by dividing the percentage into ane, as shown above.
For example, to determine the food cost per centum of a eating house that has projected sales of $10 000 and labour costs of $6000, overhead of $g, and a goal of before-taxation profits of $500, the following procedure is used:
food costs = sales − (labour costs + overhead + profit)
= $10 000 − ($6000 + $g + $500)
= $10 000 − ($7500)
= $2500
food percentage = food costs ÷ sales
= $2500 ÷ $10 000
= 0.25
= 25%
mark-up margin = 1 ÷ nutrient percentage
= 1 ÷ 25%
= ane ÷ 0.25
= iv
In this instance, the menu prices would exist adamant past multiplying the portion costs of each item by the marking-up margin of iv. Adjustments would so be made to better fit the prices to local market conditions.
If the awarding of the derived mark-up margin produces unreasonable prices, so one or more of the projected sales, labour costs, overhead, or profits are probably unreasonable. The advantage of using this system is that information technology points out (just does not pinpoint) such problem assumptions early in the process.
A like approach uses a worksheet equally shown in Figure 21.
In the middle section of the worksheet in Figure 21, a food cost percentage is adamant past subtracting other known toll percentages (i.e., operating costs, labour toll, and turn a profit wanted) from 100%. One divided by the nutrient cost per centum determines the marker-upwards margin. Food costs are then determined in the lesser half of the canvas and a carte cost derived by multiplying the full price by the mark-up margin.
In this pricing method, a "turn a profit wanted" percent is added to the cost of each menu item. This builds some potential profit into the menu prices. If you were to price everything according to costs only, the eatery would only ever be able to suspension fifty-fifty and never turn a turn a profit.
Contribution Margins
On the surface, it seems that the lower the food cost, the more room at that place is for profit. In one sense this is truthful, as the percentage profit is obviously greater for an item that has a food cost percentage of 25% (or 75% percent profit) than an particular that has a food pct cost of 45% (or 55% percentage turn a profit). However, in terms of monetary profit, the issue is not that straightforward. What has to be determined is how much money the menu detail generates. This calculation involves finding the of each item.
Contribution margin is determined by subtracting the cost from the selling cost. An item that costs $2.00 to make and sells for $three.00 has a contribution margin of:
contribution margin = selling price − toll price
= $3.00 − $two.00
= $1.00
Consider the contribution margin of two menu items that accept different food costs and nutrient toll percentages shown in Figure 22.
| Item | Food Cost | Selling Price | Nutrient Price % | Contribution Margin |
|---|---|---|---|---|
| Chicken | $iv.50 | $sixteen.50 | 27% | $12.00 |
| Steak | $9.00 | $24.00 | 38% | $fifteen.00 |
In terms of percent profit, the chicken is higher. However, in terms of money in the till, the steak creates more coin that tin be used to pay bills. The primal to a good carte is not necessarily to just keep food cost percentages low; it is to also to go along contribution margins loftier.
Balancing the Carte du jour to Achieve Targets
Card Analysis
A basic menu analysis determines how often each particular on the bill of fare is sold. This basic statistic tin be used with cost percentages, menu prices, and sales values to make generalizations about the relative value of each menu item. Effigy 23 shows a menu analysis worksheet for a lunch menu. Well-nigh POS systems can generate this type of information at the end of a shift, day, week, or calendar month.
| A | B | C | D | Eastward | F | G | H | I | J |
| Menu Particular | Total Sold | Menu Toll | Portion Cost | Food Price % | Portion C.Chiliad.[ane] | Full Food Sales | Total Food Toll | Full C.M. | C.M.% |
|---|---|---|---|---|---|---|---|---|---|
| Hamburger | 12 | $ten.95 | $2.75 | 25% | $viii.20 | $131.40 | $33.00 | $98.40 | 24% |
| Cheeseburger | 8 | $11.95 | $four.25 | 36% | $7.70 | $95.threescore | $34.00 | $61.threescore | 15% |
| BLT sandwich | 10 | $eleven.95 | $iii.75 | 31% | $viii.20 | $119.50 | 37.50 | $82.00 | 20% |
| Ham sandwich | v | $ten.95 | $3.fifty | 32% | $7.45 | $54.75 | 17.50 | $37.25 | nine% |
| Fried craven | iv | $xiv.95 | $5.25 | 35% | $9.seventy | $59.eighty | $21.00 | $38.80 | ix% |
| Clubhouse | 6 | $12.95 | $4.00 | 31% | $8.95 | $77.70 | $24.00 | $53.lxx | 13% |
| Steak sandwich | 5 | $15.95 | $7.25 | 45% | $eight.70 | $79.75 | 36.25 | $43.50 | 10% |
| Totals | 50 | $618.fifty | $203.25 | $415.25 |
The statistics provided in a menu analysis have several uses. For example, the full sold statistics tin be used to predict what future sales numbers will be. This information is valuable for ordering supplies and organizing the kitchen and kitchen staff to produce the predicted number of items.
Fifty-fifty more important than popularity is the contribution margin of each item. Ofttimes an boilerplate contribution margin is institute and compared with the contribution margin of individual items.
The boilerplate contribution margin in the example in a higher place is found past dividing the total contribution margin (full of Column I) past the number of sales (total of Cavalcade B):
boilerplate margin = total margin ÷ number of sales
= $415.25 ÷ 50
= $8.31
The contribution margin for each item is plant past subtracting the toll of the item from the selling toll. In the example in Figure 23, the contribution margins are given in Column F.
Some decisions tin can exist made comparing items:
- The hamburgers, cheeseburgers, BLTs, and ham sandwiches are below the average contribution margin. The first iii items are expert sellers and account for over half of the sales (30/50 = 60%) and they may be able to pull their weight by slightly increasing their prices. By adding $0.50 to the menu price of each of these items, they would each accept a contribution margin higher up or close to $8.31.
- The ham sandwich is significantly lower than the boilerplate margin and is also depression in sales. It might be best to drop this particular from the carte du jour and replace information technology with something else.
- The fried chicken has a skillful contribution margin but its sales are a little on the low side. To increase sales, the chicken might be given more prominence on the carte or might be offered as part of a special with a small salad for a slight increase in price. As long as the additions have a reasonable nutrient toll percentage and are inexpensive compared to the portion cost of the chicken, the increment in sales should accept a positive bear on on the total contribution margin (the values in Column I).
The type of carte du jour analysis must be tempered with common sense. Because averages are used to make up one's mind an acceptable margin or level of sales, some menu items will automatically exist nether the average just as some will have to exist above the boilerplate. If items that are under the average are replaced, the next fourth dimension a carte analysis is done there will be a new average and other items under that average. Taken logically, your menu options will run out earlier you lot have every particular being exactly at the average!
Given that menu items are usually broken down into categories, this type of analysis is most effective when comparing like items. An analysis of all of the desserts or starters to compare their margins is much more constructive than comparison the margin of a dessert confronting a lobster dinner, which by the very nature of its price and toll will always have a higher contribution margin.
Profitability
You want to sell menu items that take a high margin of . The relative profitability of an item is calculated by comparing its contribution margin to the average contribution margin (ACM) of all items. The contribution margin is the selling price of a menu detail minus the standard nutrient cost of the item. This is the amount that the item contributes to the labour cost, other costs of doing business, and profit. The ACM equals the total contribution margin divided by total numbers of items sold. Assisting items have a contribution margin equal to or higher than the ACM.
Desserts and appetizers may have lower contribution margins than entrées. This is considering these items generally take lower prices and cannot contribute the aforementioned dollar value of contribution margin, even though their food cost percentage may exist lower than entrée items. Also, the eatery may wish to tempt patrons to add these items to their purchase, increasing the average cheque size. If you can sell more than to an individual guest, yous increase the revenues without increasing the labour costs and other costs to the same extent.
For example, if the client orders and titbit before the entrée, he or she does not have upwards any more time in the eating place (that is, the client does not decrease seat turnover) because the appetizer is served and eaten during the normal waiting time for preparing the main dish. As well, the boosted labour of the server is minimal considering even without ordering an appetizer service may all the same be needed to provide additional bread or refill water glasses. Thus, the auction of the appetizer will increase the profitability of the eatery fifty-fifty though the contribution margin is not as high.
Desserts may too have a low contribution margin. Often desserts are purchased ready-fabricated (due east.g., cakes and cheesecakes). There may be footling labour toll in serving these items then the overall contribution of the dessert item to profitability is high.
Items that require little preparation (that is, have a low labour toll) may however generate a significant contribution to margin even when their food costs are higher. Even if the food cost of the item was very loftier and the CM low, yous would want to keep this detail because the combined labour cost and food price is low. Thus the amount this particular contributes to the fixed cost of the business organisation is high.
Potential Profitability of Carte Items
To determine the potential profit in a menu particular, yous must accept a skillful idea of the potential cost of producing the detail. Pre-costing the menu means you determine the cost of producing every detail on the menu under ideal conditions. The supposition is that cooks will follow directions, the portions volition be accurately measured, and all the portions will be sold. The results are the optimum costs; in reality costs could be higher.
Popularity
Another factor to consider when reviewing your menus is the popularity of an detail. Popularity is determined past comparing sales of items to expected popularity. The expected popularity is the predicted carte mix (sometimes chosen the sales mix) if each of the menu items in a category were equally popular.
An example is provided in Figure 24, which lists seven appetizers. The expected popularity would be 100% divided by 7 (the number of menu items) or 14.3%. Bill of fare analysis assumes that popular items have sales of seventy% or more of the expected popularity. In the example, appetizers would have to exceed 10% (seventy% of 14.3%) of appetizer sales in society to be considered popular. Which of the items are popular?
| Menu Particular | Total Sold | Menu Price | Portion Cost | Food Toll % | Portion C.M. | Full Nutrient Cost | Total Food Sales | Total C.M. | C.Thou.% |
|---|---|---|---|---|---|---|---|---|---|
| Thai Wings | 31 | $half dozen.75 | $i.93 | 28.59% | $iv.82 | $59.83 | $209.25 | $149.42 | 4.63% |
| Dry Ribs | 211 | $half dozen.75 | $1.72 | 25.48% | $v.03 | $362.92 | $ane,424.25 | $1,061.33 | 31.54% |
| Nachos | 71 | $half-dozen.95 | $1.53 | 22.01% | $5.43 | $108.63 | $493.45 | $384.82 | 10.61% |
| Calamari | 19 | $7.50 | $2.23 | 29.73% | $5.27 | $42.37 | $142.l | $100.xiii | 2.84% |
| Soup and Salad | 78 | $v.95 | $1.55 | 26.05% | $4.xl | $120.90 | $464.x | $343.twenty | 11.66% |
| Thai Salad | 129 | $6.45 | $ane.68 | 26.05% | $4.77 | $216.72 | $832.05 | $615.33 | nineteen.28% |
| Cajun Caesar | 130 | $6.95 | $1.76 | 25.32% | $5.19 | $228.lxxx | $903.50 | $674.70 | 19.43% |
| Total Appetizer | 669 | ACM = | $4.98 | $1,140.70 | $4,469.10 | $three,328.93 | 100.00% |
You can run into at a glance that Dry Ribs is the about popular appetizer, followed by Thai Salad and Cajun Caesar. Nachos and Soup & Salad autumn just slightly over the 10% boundary. Thai Wings and Calamari prove dismal results in terms of popularity with but 4.63% and two.84% of appetizer sales.
Sales of carte items are analyzed to put card items in four categories:
- Popular and profitable
- Popular but non profitable
- Non pop but profitable
- Neither popular nor profitable
Figure 25 displays graphs the popularity of the appetizers from the example over these four categories. The graph shows popularity on the vertical axis and contribution margin on the horizontal axis. A line is drawn vertically to bespeak the ACM and horizontally to show 70% of expected popularity. This allows you to see at a glance which category an particular falls into: A) Less popular and profitable, B) popular and assisting, C) unpopular and unprofitable, and D) Unpopular and profitable.
The graph shows that Thai Wings and Calamari were very unpopular menu items, but it likewise provides information on profitability. Thai Wings has a contribution margin that is lower than the ACM for appetizers. Calamari has a contribution margin that is higher than the ACM.
Figurer programs may automatically calculate contribution margins and popularity. The data may be presented in tables or spreadsheets as shown above, or in a iv-box analysis, with less detail, equally shown in Figure 26.
| Unprofitable | Profitable | |
|---|---|---|
| Popular | Thai Salad, Soup and Salad | Dry Ribs, Cajun Caesar, Nachos |
| Unpopular | Thai Wings | Calamari |
Bill of fare Revisions
Popular and profitable items are ones you want to maintain on your carte. Maintain the specifications of the detail rigidly. Do non change the quality of the product served. Feature the item in a prominent location on the bill of fare. You want to sell this item, and so brand sure that customers see it. Have servers suggestively sell the detail. For case, when asked for suggestions, they could say, "You lot may want to effort our Linguine Chicken. Information technology is very popular. It has a cream sauce with lots of fresh basil." Exam the possibility of increasing prices by raising the cost slightly.
If an item is popular simply non profitable, you lot want to see if you can increment the contribution margin without reducing its popularity. Increase prices carefully and gradually. If the item is bonny because of its high value, it may nonetheless be a good value after a price increase. You could also increase the contribution margin by reducing the cost of the accompaniments. For instance, you might substitute less plush vegetables. You might also try to reduce costs by decreasing the portion size. If y'all are unable to amend the item's popularity, you may want to relocate it to a lower profile part of menu. If the particular has a very low labour cost, you may be able to justify the lower contribution margin because less revenue is needed to compensate for the labour cost.
Not popular but profitable items are frequently a puzzle. You want to sell these items, only your challenge is to encourage the guests to buy them. Shift need to these items by repositioning them on the menu. Encourage servers to suggestively sell these items. Consider decreasing the cost slightly or calculation value by offering a larger portion size, more expensive accompaniments or garnishes. However, you need to be cautious so that you lot exercise non modify the detail into a popular but unprofitable item.
Items that are neither popular nor profitable are obvious candidates to remove from the carte du jour. They are not pulling their weight. The only time such an item might be left on the menu is if it provides an opportunity to apply leftovers and has low labour costs associated with its preparation.
Using Specials and Feature Items
Some other way to balance the menu is by using daily specials and characteristic items. For example, assume you have been tracking your nutrient costs using a daily food cost control sheet (refer back to Figure 20). Information technology is halfway through the month and you are running a slightly higher than average food cost for the month and so far. Choosing to run specials that accept lower food costs or having the staff feature and promote the amend nutrient cost items should help to bring the targets in line past the end of the month.
Arranging Items on the Menu
Another mode of technology the menu is by strategically arranging the items on the carte. Some menus utilise callout or characteristic boxes to highlight certain items, others have pictures featuring certain menu items, and others may note an item as a house specialty. These are all ways to attract the attention of the customer, and in about cases, you volition find that information technology is these items that sell the all-time. If these items also have high contribution margins and/or low food costs, they will increase profitability. Featuring the items with the lowest margins and highest nutrient costs will have the reverse effect, and likely mean that you volition not exist in business concern for very long.
There are also some psychological reasons that things volition sell on a carte. Often the nearly expensive or the to the lowest degree expensive detail will non sell likewise equally other items on the bill of fare because customers do non wanting to appear either extravagant or cheap in front of their guests. Using descriptions that entice the client (e.thousand., "award-winning," "all-time in the city") will increase the auction of a particular particular, simply make sure you can deliver on the promise!
All in all, balancing the menu is something that takes fourth dimension and experience to do well, but is a skill that you will need to run a profitable kitchen.
Source: https://opentextbc.ca/basickitchenandfoodservicemanagement/chapter/describe-the-principles-of-menu-engineering/
Belum ada Komentar untuk "How Much Does a Pound of Beef Cost at Target"
Posting Komentar