Blog

Operator Solutions Using Mocafe

Last night, a perfect New England summer night, I was talking about cafe and restaurant management with an old friend, a former executive chef (like me), restaurant owner and major lines food salesman. The topic of passion was how old-school successful operators calculate the hourly success of their business.

One of the tricks old-school operators use is knowing exactly how much money each item sold puts to their bottom line. A good operator can stand in the middle of the shop and point at each item sold and tell you:

That turkey panini puts $3 to my bottom line. That frappe makes me $2 every time one is sold. Thatapple fritter drops a buck in my pocket every time we sell one.

Now they aren’t telling you how much each item sells for; they’re telling you how much profit each item makes.

How many operators today, or, cafe managers, can tell you how much a sale of every item in an hour puts to profit?

How do you calculate this? In future blogposts, I’ll cover calculating food or beverage cost, calculating labor cost, and calculating operating expense and how to calculate each of these factors on a per item level. Basically, it works like this (example):

Item Sell Price – Ingredient Cost – Labor Cost – Operating Expense = Profit, or, “What Goes In Your Pocket”

By the way, neither of us ever shied away from revealing this information to our staffs. In fact, we often shared this information, as doing so 1. taught staff valuable skill toward becoming a more valuable employee and 2. motivated them to upsell customers to more profitable items.

Have you calculated the profit you make from the sale of each item you offer? We’d love to hear your opinion and methods of tracking cafe performance.

Jeff from Mocafe

Solutions for Operators

A standard practice in the restaurant industry is to calculate the food cost of every item you sell. Knowing this cost allows you to a) purchase ingredients more wisely and b) maintain and train staff to standards. There is a time investment in making these calculations, but the reward is a "tighter ship", leading to greater profit opportunity and lessening of production costs.

So how do you calculate the production cost of your menu items? If you ballpark it in your head, it's likely to not be accurate. Let's get started in a demonstration. First, download the sample Food Cost Worksheet. Then you'll need tools to measure: a scale and volume measuring (cup/teaspoon) tools are necessary.

Click this link to open a Food Cost Worksheet Template you can download for your use.

Please notice there are formulas in some of the cells. Be careful to not edit those cells.

Let's fill this worksheet out for a bagel with plain cream cheese. The first thing to do is enter the date and the recipe name: "Bagel with Cream Cheese". We're not going to enter anything in the cells named "RecipeMultiplied" nor "Size" - we don't need these for this sample.

Next, let's enter the sell price for this item. I randomly chose $2.95. We don't need to enter anything in either of these two cells (there are auto-formulas in them): "Cost Per Portion" and "Cost %".

Now let's enter our ingredients. We type in Bagel (be as specific as you want - this is a text cell). Moving right, we enter the number 1 in the "Count" column. Moving right again, we enter the cost of that one bagel in the "AP$/unit" cell. Let's pause so I can explain these column heading in both the measures section and the costing section.

In the measures section, we have three columns marked "Weight", "Volume" and "Count". If the ingredient is measured by weight, enter it in that column (this is when you need a scale). If measured by volume, enter the volume amount in that column. The same goes for count.

In the costing section, we have the column marked "AP$/unit". "AP$/unit" stands for Price of Ingredient As Purchased, per unit of measure. In this example, the cost of one plain bagel is $0.75 each.

The right-most column is the subtotal for this ingredient. You'll need to enter a formula in here. The formula for the bagel in this example looks like this:

=sum(E10*F10)

E10 is the cell that contains the count of the ingredient. F10 is the ingredient cost. The multiply function is the star character *

Writing the formula in this column is pretty easy. You only need to choose which cell from the measure of the ingredient you want in the formula. It is going to be in either the Weight, Volume of Count cell of that row. Let's look at the next ingredient to demonstrate what I mean by this.

The next row down has the cream cheese ingredient. I've put in one ounce by weight and entered the cost per that weight measure (ounces). The formula I write in the subtotal column looks like this:

=sum(C11*F11)

Pretty simple, really. In the old days, they'd do this with a calculator and note paper. Once you get comfortable entering the subtotal formulas, it goes pretty quick. By the way, if you have multiple ingredients in the same measuring column, simple copy the formula from one row to the next.

So what happens now?

The worksheet automatically adds up all the subtotals at the bottom. It also calculates the food cost percentage. These are handy numbers for you to know. You now know exactly how much a menu item costs in raw materials. You also know how much of the menu selling price that cost is; in this example, 36.6 percent.

Got questions? Feel free to comment below and I'll answer.

Jeff from Mocafe