3/25/2023 0 Comments Sales cogs![]() Similar to food costs, there is no ideal cost of goods sold, as it depends on the type of food you serve, your other restaurant expenses, and your menu pricing. What is an ideal cost of goods sold for restaurants? With variable expenses, especially one as central to your business’s finances as CoGS, we recommend monitoring it every week and assuring that the price you’re charging for menu items leaves you with enough gross profits once all fixed, variable and mixed expenses are subtracted.Īdjust menu prices to compensate for your expenses, including CoGS, and assure you’re not leaving any profits on the table. This is why CoGS is considered a variable expense. However, your CoGS is not a fixed expense.Īs the cost of food inventory and supplies changes, whether it’s a result of inflation or seasonality, so will your cost of goods sold. While each restaurant’s cost of goods sold varies from one restaurant to another, typically one-third of a restaurant's gross revenue goes towards paying for CoGS. Unlike food costs, CoGS is the total costs associated with a dish, rather than exclusively the food ingredients. For example, if you serve a pizza, your cost of goods sold would include the cheese, dough, sauce, other condiments, dipping sauces, packaging (if it’s for meal delivery) - right down to the napkins. How to lower cost of goods sold What is cost of goods sold for restaurants?Ĭost of goods sold (CoGS) is the sum of the total ingredients and other expenses that go into making a dish.In this article, you’ll learn everything you need to know about restaurant CoGS: It ties into your restaurant’s menu engineering efforts (i.e: how you price menu items and lay them out in your menu to manufacture more sales), your profit margins, and your inventory management (i.e: the inventory counts you perform at the beginning and end of each day).Īnd ultimately, you maximize your revenue when you strike the perfect balance between cost of goods sold and total revenue from food sales.Ĭhances are that if you’re reading this, you already know that CoGS is important, but aren’t quite sure what it is or how to find it. Cost of goods sold (CoGS) is one of the most important metrics for a restaurant to keep track of. ![]() How important is it to calculate cost of goods sold for restaurants? We argue, very. ![]()
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