Definition of Food Costing

Food cost can also be referred to as production cost, food cost Ing is the overall
result of the total cost of purchasing food or beverage inventory which will then be
divided by the entire total cost of sales. The smaller the percentage of food cost of
a food menu, the greater the profit that will be obtained.

As a restaurant entrepreneur, it is very important to monitor the food cost of our

restaurant so that we can know when to change the price, product, and amount of
raw material purchases to increase the percentage of profits in the restaurant.
Therefore, we can learn how to calculate the selling price of food from the food
costing method, in order to achieve profits that are in accordance with the target
restaurant.

Food Cost Ideal and Actual Food Cost

The calculation of food costs is divided into two, namely the ideal food cost and
the actual food cost. The ideal food cost is the percentage of food cost whose
calculation is based on the basic / ideal formula, while the actual food cost is the
percentage of food cost which takes into account the value of raw material
inventory at the beginning of the period and the end of the period.

Please note that the percentage of actual food cost will always be higher than the
percentage of ideal food cost. This can happen because during the production
process of the food or beverage menu, there must be ingredients that are wasted or
used more than the existing recipe standards. This is where the importance of
calculating the percentage of actual food cost as a consideration forthe Chef in
minimizing the number of ingredients discarded.

How to calculate the Ideal Food Cost

In calculating the ideal food cost, the most important thing is to have a standard
recipe from a menu. Here is an example of how to calculate the ideal food cost:

An example of a Food Cost table whose calculation is based on standard recipes in

serving the Potato Wedges menu:
The selling price of Potato Wedges menu at the restaurant is IDR 20,000

From the two data above, we can calculate the percentage of the ideal food cost
from the Potato Wedges menu with the formula:

(Total raw material price of one food menu / Selling price of food menu) *
100%

The ideal food cost percentage for the Potato wedges menu is

(IDR 5,000 / IDR 20,000) * 100% = 25%

How to calculate Actual Food Cost

As we know, food costs are divided into two types, namely ideal food costs and
actual food costs. Before calculating the actual food cost, it is very important to
know the entire amount and value of raw materials and the cost of goods produced
used. It is necessary to know the number of raw materials used as well as the costs
incurred to make one food menu. After knowing the numbers of food COGS, we
can predict the amount and total length more easily.

How to Calculate COGS (Cost of Goods Sold) of

Food
After we learn the ideal food cost method and the actual food cost, we need to
know how to find out the COGS of a food. To know how to calculate the COGS of
food from a menu, we first need to know the value of raw material inventory at the
beginning and end of the period and the value of purchasing raw materials in one
period.

By finding out the figure of the COGS (Cost of Goods Sold), we can find out the
estimate of the raw materials that will be used to cook a food. From the HPP data,
we can also find out the quantity of raw materials wasted to serve a set food menu.
From this, the chef can reconsider the supply of raw materials purchased and used
later in cooking a dish.
The formula in calculating the Food COGS is

Initial Inventory Value + Purchase Value in One Period – End Inventory

Value

An example of HPP calculation in the Potato Wedges menu.

Raw Potato Wedges price is Rp 25,000

The initial inventory of raw Potato Wedges amounts to 2kg.

That way, the initial inventory value is IDR 25,000 * 2kg = IDR 50,000

In a one-month period, the restaurant buys raw Potato Wedges in the amount of 20
kg.

That way, the purchase value in one period is IDR 25,000 * 20kg = IDR 500,000

At the time inventory the end of the month, the remaining supply of raw Potato
Wedges is 5 kg.

That way, the final inventory value is Rp 25,000 * 5kg = Rp 125,000

From the three data, we can calculate the COGS from the Potato Wedges menu by
entering the values from the data into the formula.

The HPP value of the Potato Wedges menu is

IDR 50,000 + IDR 500,000 – IDR 125,000 = IDR 425,000

After the COGS value is obtained, the actual food cost value can be determined by
knowing the number of portions of Potato Wedges sold in one period.
Examples and Formulas for calculating Actual
Food Cost
Here is an example and calculation formula on the Actual Food Cost:

Formula:

Actual food cost= (COGS / Total value of sales in one period) *100%

Potato Wedges example sold as many as 70 servings with a price per serving of
IDR 20,000

Total sold 70 portions * IDR 20,000 = IDR 1,400,000

COGS = Rp 425,000

The actual food cost percentage is

(IDR 425,000 / IDR 1,400,000) * 100% = 30.35%

From the comparison of the percentage of actual food costs that are higher than the
ideal food cost, it shows that there is a waste of raw material use during the
production process. The cause can be in the form of wasted raw materials or
presentations that are not in accordance with the standards of the recipes that have
been made.