Food costing and menu pricing

Do you ever ask yourself why some items have to be charged highly and others cheaply? What is the technique involved in pricing your restaurant menu? Before you open up your restaurant, care should be taken into food charges; and price items in a way that can enable you to make a profit. But how do you know that when I charge such an amount I will be making a profit or even not break even? Food cost means the price of a certain dish, say a pizza in comparison to the cost of ingredients like (wheat flour, cheese, salt, yeast etc) used in its preparation. In simpler terms how much you spend determines how much you will charge. According to research, 80% of the restaurant managers and owners neither know how to cost their food nor the menus. Ask any of them today how they came to arrive to a certain charge now and see what response you will get. The question is; When do you know that when I charge this amount I am able to make a certain percentage of profit? When costing, cheap ingredients should be mixed with expensive ones such that you don’t end up having a very expensive menu for your customers. Let us take an example of a dinner where guests will have skewered chicken and bubble and squeak. The costs can be summarised as follows: • The chicken skewers can cost you around Rwf500• Bubble and squeak (mashed potatoes, carrots, Brussels sprouts,carrots, onions, butter) can cost you around Rwf100 Therefore the total meal cost you around Rwf600 francs. Everything that goes on a customers’ plate must be accounted for in order to make a profit The formulae to calculate this is simple; total food cost / 0.35 (600/.35=1714 francs) and this will be the very minimum for you to charge a customer. This figure is not awkward since you are not charging food alone on this customer but it’s from his plate that will be able to pay for a maid who serves him, pay for utilities like power and water and on top of that, rent. You can even bump it to Rwf2050 to make a bigger profit. Strive hard to reduce the food costs to about 30% to realise profits for your restaurant. Ends