Key formulas used in F&B control:

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Food Cost Percentage:

  • Formula: Food Cost Percentage = (Cost of Goods Sold / Total Food Sales) * 100
  • Purpose: Measures the percentage of revenue spent on food products.  

Beverage Cost Percentage:

  • Formula: Beverage Cost Percentage = (Cost of Goods Sold / Total Beverage Sales) * 100
  • Purpose: Measures the percentage of revenue spent on beverage products.

Prime Cost Percentage:

  • Formula: Prime Cost Percentage = ((Cost of Goods Sold + Labor Cost) / Total Sales) * 100
  • Purpose: Measures the combined cost of food and labor as a percentage of total sales.  

Inventory Turnover Ratio:

  • Formula: Inventory Turnover Ratio = Cost of Goods Sold / Average Inventory Value  
  • Purpose: Measures how quickly inventory is sold and replaced.  

Contribution Margin:

  • Formula: Contribution Margin = Revenue - Variable Costs  
  • Purpose: Measures the amount of revenue available to cover fixed costs and generate profit.  

Additional Considerations:

  • Portion Control: Ensure consistent portion sizes to minimize food waste and maintain profitability.  
  • Menu Engineering: Analyze menu items to identify high-profit, low-profit, high-volume, and low-volume items.
  • Purchasing and Receiving: Implement strict purchasing procedures and receiving inspections to control costs and quality.  
  • Inventory Management: Maintain accurate inventory records to prevent shortages and overstocking.  
  • Labor Cost Control: Schedule staff efficiently and monitor labor hours to reduce labor costs.  

By understanding and utilizing these formulas, you can effectively monitor and control F&B costs, improve profitability, and make informed decisions to optimize your operations.

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