Chapter 7:
Recipe Costing
Recipe Costing
• Method used to determine the profit on food
products
• To obtain and maintain maximum profit, a
foodservice operation must be aware of four
expenses:
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Food
Labor
Overhead
Profit
Fundamentals of Menu Planning 3rd edition. (McVety, Ware and Ware)
John Wiley & Sons, Inc. © 2009
Guidelines for Achieving a
Greater Profit
• Buy comparatively.
• Do not always purchase a product with the
lowest price.
• Keep track of pilferage.
• Train employees properly to will help reduce
food cost.
• Portion food in its proper portion size to control
the food cost percentage.
• Forecast accurately.
Fundamentals of Menu Planning 3rd edition. (McVety, Ware and Ware)
John Wiley & Sons, Inc. © 2009
How to Cost out a Recipe
• Once a recipe has been selected, it needs to be recorded
in a format that is easy to use. The form should include:
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A. Recipe name
B. Recipe identification number
C. Portion size
D. Yield or number of portions
E. Ingredients
F. Waste percentage
G. Edible portion (EP)
H. As purchased (AP)
I. Unit purchase price
J. Conversion measure
Fundamentals of Menu Planning 3rd edition. (McVety, Ware and Ware)
John Wiley & Sons, Inc. © 2009
How to Cost out a Recipe Cont’d
▫ K. Ingredient cost
▫ L. Preliminary subtotal recipe cost
▫ M. Q factor of 1 percent (Place percentage in this
box and then multiply the
▫ Q factor % by the preliminary subtotal recipe
cost.)
▫ N. Q factor cost
▫ O. Subtotal recipe cost (Add Q factor cost to the
preliminary subtotal recipe cost.)
▫ P. Portion cost (Divide the subtotal recipe cost by
the total portions/yield.)
Fundamentals of Menu Planning 3rd edition. (McVety, Ware and Ware)
John Wiley & Sons, Inc. © 2009
How to Cost out a Recipe Cont’d
▫ Q. Additional cost (If this is an `a la carte menu item, leave
this box blank; if not, place the portion cost of the other
menu items in this box.)
▫ R. Total recipe cost (Add any additional cost to portion
cost; if there are no additional costs, the portion cost
becomes the total recipe cost.)
▫ S. Desired overall food cost percentage (Retrieve this
number from the annual profit and loss statement.)
▫ T. Preliminary selling price (Divide the total recipe cost by
the desired food cost percentage.)
▫ U. Adjusted/actual selling price (based on what the
customer is willing to pay)
▫ V. Adjusted/actual food cost percentage (Divide the total
recipe cost by the adjusted/actual selling price.)
Fundamentals of Menu Planning 3rd edition. (McVety, Ware and Ware)
John Wiley & Sons, Inc. © 2009
Recipe Costing Software
• Programs offer the following advantages:
▫ The amount of time they save
▫ Increased accuracy
▫ The detailed reports that they are able to generate
• Packages all for the following uses:
▫ The generation of a list of inventory ingredients and their
cost
▫ A summary of ingredient quantities
▫ A file storage system of the method of preparation of
recipes
▫ A calculation of recipe costs and food costs percentages
▫ The ability to convert recipes to increase or decrease the
yield
Fundamentals of Menu Planning 3rd edition. (McVety, Ware and Ware)
John Wiley & Sons, Inc. © 2009