By Chef Colin Roche, PhD, MBA, CEC, CCE, FMP, CHE
Recipe costing is a vital part of every restaurant operation. If you don’t do it right, there are high chances that your restaurant will run into a loss. The restaurant industry is extremely volatile, and any calculation mistake can cost you a lot more than what you can expect. Therefore, recipe costing should be done so that you always have an edge in making a profit.
Recipe costing, in simpler terms, is essentially calculating the cost incurred in preparing a particular dish. It takes into account the exact amount and cost of the ingredients in making the dish. The main thing to remember while doing the recipe costing is keeping the edible portion in mind, which is the amount of food prepared that you are going to serve in one dish.
The primary reasons that make recipe costing extremely important are:
- Recipe costing helps you know how much food cost is incurred to prepare a dish. This gives you a clear view of how much you can earn per dish.
- It plays a significant role in deciding the selling price of the items on your menu. If the food cost of an item is high, it just makes sense to sell it at a higher price to garner profit.
- It tells you when to reduce a recipe cost. If you keep up-to-date with your costing and see that you are going beyond your target cost percentage, you can easily plan how to reduce the costs.
- It gives you an insight into the dish’s profit margin which you can, in turn, use to promote the high-profit items through suggestive selling and promotions.
In other words, recipe costing is important because having recipe costing cards allows you to make smart business decisions to ensure your profitability, such as what to charge, whether you need to find less expensive products, if an item needs to change or even drop from the menu, etc. The only way to know the answers to these questions is to know what things cost.
So why do so many restaurant owners, chefs, kitchen mangers and front-of-house managers run away from this process and simply not do use recipe costing cards to cost out their recipes?
Generally, for a few basic reasons:
1) They don’t know how.
2) There are so many recipes that the sheer number scares them.
3) They believe they generally know how much each recipe costs.
The power of recipe costing is incredible, but I agree it can be time consuming. However, that is not a reason not to do it or to not learn how to do it. You have a financial responsibility to make sure you are hitting your numbers and making a profit in your food service establishment. And the only way to do that is you must cost out your recipes with recipe costing cards!
To learn how to cost out a recipe cost card, check out this free, informative video – https://youtu.be/KbacDjM14CM
If you would like even more, in-depth training on recipe costing, here is a very inexpensive online course that you can take at your own pace – https://chefroche.com/course/recipe-costing-made-easy/
