Recipe Costing is not a one-time occurrence, it’s an ongoing process. When food costs change, your recipe costs also change.
The actual purpose behind plate costing is so that you can price your menu items in a way that ensures you’ll make money.
If you notice a higher food cost than usual, you can adjust your selling price, reduce portion sizes or, find the same or a similar ingredient at a lower cost.
As much as you enjoy the restaurant industry, at the end of the day, you have to make profit.
So how exactly do you calculate the cost for a recipe?
What is Recipe Costing?
Recipe costing is exactly what it sounds like—calculating the cost of a single dish on the menu.
If you’ve ever written a menu, then you know how complicated and time consuming this process can be.
Plus, if you’re anything like me and not good at math, things just got MUCH harder.
How to Calculate Plate Cost
Let’s make a burger:
Step One: Measure out the quantity of each ingredient in a dish (8oz ground beef, 1 bun, 2oz pickles, 1oz ketchup etc.)
Step Two: Calculate the price for each ingredient in the dish. Things get tricky here because you are dealing with different pack sizes and units of measure. Let’s use ground beef as an example.
Your recipe requires 8oz of ground beef, but when you bought the ground beef it came in a 5lb package. We will need to convert 5lbs to ounces. (16oz=1lb. 5×16= 80oz)
We now need to determine the price per ounce. Since the original purchase cost was $30, we simply divide $30 by 80 which equals $0.37 per ounce.
To determine the cost of an 8oz patty we multiply 8 x $0.37 which equals $3. So, $3 for our 8oz burger patty.
Step Three: Complete the following for every item in that recipe and add them together. This equals your plate cost (recipe cost) in a dollar amount.
Step Four: Calculate Food Cost:
Recipe Cost ÷ Selling Price x 100 will give you your Food Cost Percentage
You will have to do this for EVERY item on your menu! Who’s got time for that?
To make it even more difficult, ingredient prices are constantly changing. The price for the ground beef in your burger just went up $3 a pound, decreasing your margins.
You now have the glorious task of going back into every recipe and changing the price for ground beef. This happens week after week with almost every ingredient!
The Orderly Way
Hopefully by now you get the gist of this post. Recipe Costing is SO important but also extremely difficult to maintain.
Orderly was developed for chefs, by chefs, to be the easiest and most reliable food costing tool on the market. The less time you spend in our software, the more time you have to do what you truly love!
Simply build your recipes in Orderly once. One time.
With every invoice that comes into the system, Orderly will automatically update the ingredient price showing you the true cost of the recipe today and the current margins based off your selling price!
This allows you to make many updates and revisions as a problem arises.
Buying a new ingredient or your vendor sent a substitution? No problem!
Orderly groups together substitute ingredients with the products you typically buy.
This means that regardless of whether you bought Hormel Apple Wood Smoked Bacon last week or Oscar Myer Apple Wood Smoked Bacon this week, Orderly will group these like-items together and use them interchangeably in your recipes depending on which item you bought most recently, giving you the most up-to-date price for every menu item you build in Orderly!
Recipe costing is something that NEEDS to be done to ensure you are running a profitable business.
FINALLY, a solution resilient to substitutions and supplier changes.
Say goodbye to daily recipe maintenance!
Ready to put your recipe costing on autopilot and receive up-to-date food cost insights?
Reach out today and our team will be happy to discuss how Orderly can help!