A craft brewery takes into account the same materials and labor as food costing, as well as the same inventory management. You’ll need to track both to be successful, breweries run the risk of losing money on missing inventory (all those small cans and bottles), not to mention the ingredients used to make the beer.

Breweries need to calculate the costs of your kegs, cans, bottles, and any containers you use. You’ll need to count your inventory, determine your sales and see if you have any variance. Make sure all that work your doing isn’t walking out the door!

This article is a great intro to costing and inventory control for breweries.

Then take a look at reciProfity and see how easily it lets you price out your beers and manage all your inventory, from ingredients through the finished product. And if you make and serve food reciProfity will calculate all your recipe costs and manage your food inventory for you.

What should I do first price my recipes or manage my inventory? That’s a question we’re often asked. When faced with multiple options it’s sometimes easy to get discombobulated.

If you are running a food service operation you’ll want to determine what the most pressing demands are. Is it pricing your menu? Keeping close tabs on your inventory? You can definitely do both but you’ll need to start with one.

Set your priority and use that as your guide.

• Whichever option you choose the first thing you need to do is get your inventory entered into reciProfity. Enter all of your inventory from all of your vendors. Do this by uploading Order Guides (NOT invoices) or entering your ingredients manually.

  Now you have several choices –

  • Begin to enter your recipes so you can price them
  • Start counting your inventory

    This choice depends upon what is most important to you right now. Most users start with entering recipes so they can get a handle on menu pricing.
    
    If getting control of your inventory is primary then start creating locations and assigning your inventory to those locations.

• Once you have both inventory and recipes entered you should start uploading your invoices so your recipes can be priced accurately.
• If you have not created Locations and assigned your inventory into those locations you should do that now.
• Are you integrating with a POS system? Now is the time to start importing your sales mix so you can get your Actual vs Ideal Inventory reports.
• Don’t forget to take counts! This will give you accurate reporting.
• And finally, run your inventory reports!

reciProfity is the only product with yield information for more than 1,000 raw food ingredients from The Book of Yields.

reciProfity does the work! You browse to your ingredient and reciProfity calculates all conversions, yields and after shrinkage pricing. Then we use that after shrinkage price in your recipes for the most accurate costing.

The Book of Yields is the chef’s best resource for planning, costing, and preparing food more quickly and accurately.  It’s an unmatched compilation of measurements, including weight-to-volume equivalents, trim yields, and cooking yields.

reciProfity contains this comprehensive collection of accurate food measurements, it’s the foodservice managers most powerful tool for controlling costs.

From within an ingredient click Select Book of Yields Conversion.

Then choose the ingredient you want.

reciProfity uses the the conversions in your recipes (weight to volume, volume to weight and any After Shrinkage price). You don’t need to do any of the work!

Want to see more?

reciProfity is recipe costing software that does the food costing math for you. So it seems like magic!

The Basics Of Recipe And Food Costing Magic (Math)

If you’ve been running restaurants for years and doing restaurant food costing you’re likely already profitable and are using reciProfity to cost out your recipes and cut down on your admin work. But if you’re newer to the game, these articles will teach you how to conquer the profitability puzzle.

Here’s a quick primer on restaurant math: Spend 30% of your revenue on food and drinks to sell to your customers. Spend another 30% on your staff. Spend 20% on everything else: rent, electricity, gas, insurance, taxes, linen, maintenance, repairs, and light bulbs. Roll 10% back into the business to make it better and put 10% in your pocket. You’ve earned it.

To get this math right, it’s absolutely essential to have an accurate Food Cost. This is the most basic purpose of reciProfity. In other businesses this is called the Cost of Goods Sold (COGS) or Cost of Sales. Your Food Costing can be expressed in two ways:

1. As a number: exactly how much money do you pay for the ingredients in a recipe?
2. As a percentage: what percent of a recipe’s sales price goes to paying for its ingredients?

Learn To Speak Like A Recipe And Food Costing Pro

Here are some other terms you should know before we get into menu pricing strategies:

• Fixed Costs, or Overhead, are the expenses connected with opening and operating your business every day. This includes rent, electricity, gas, insurance, and anything else that stays the same (or almost the same) regardless of your sales volume.
• Variable Costs are expenses that change directly proportionally to your sales volume. For our purposes, these are the same as Food Cost.
• Payroll exists somewhere between Fixed Costs and Variable Costs. Even though your payroll costs vary depending on how busy you expect a service period to be, they can’t be expressed as an exact proportion of revenue so it’s not really a variable cost.
• Gross Margin is the difference between revenue and food cost. In other words, it’s your profit AFTER paying for food but BEFORE paying your fixed costs. Also called Contribution Margin or Gross Profit.
• Net Income is your profit after paying BOTH fixed and variable costs. From your accountant’s standpoint, this is the same as your EBITDA: earnings before interest, taxes, depreciation, and amortization.
• Breakeven Point is the amount of revenue you need to exactly cover all your fixed costs, variable costs, and payroll. In other words, it’s a number of sales that results in exactly zero net profit/loss. Here’s how to calculate a number of sales you need to do in order to hit your breakeven point:
  • Breakeven Sales = Fixed Costs/Gross Margin %

Simple Example to illustrate these terms:

How To Identify A Better Food And Recipe Cost Model

Once you begin to add recipes in reciProfity you’ll begin to see how we help you determine your food cost % and match it to a target.

If you see an Actual Food Cost % that is above your Target you’ll start thinking about how best to manage that.  We’re getting you off to a good start here.

Would you change the price you charge? Or modify your ingredients? Or have a talk with your supplier?

My sous chef and I went for Mexican food with some friends last Sunday (obviously) and someone got the most amazing chiles rellenos.

Of course, my sous and I immediately started talking about ways we could incorporate some of these flavors into our food, especially the ridiculously delicious smoked tomato salsa.

We could put it on our fish tacos, it would be an excellent counterpoint to the cilantro ranch dressing. We could use it in a reimagined eggs Benedict.

This went on for 15 or 20 minutes until one of our friends said, “Oh my god, why don’t you guys ever stop working?”

It’s true; we don’t. And neither do any of the good cooks I’ve ever worked with. If we’re out at a restaurant, we’re constantly looking for things they do well that we can learn from, or for things they do badly that we can avoid doing (or gloat about, if we’re feeling smarmy).

I’m friendly with the chef at a great local sushi restaurant. My knife skills are rock solid, but his blow mine out of the water. So of course I jumped at the chance to have him teach me some Japanese techniques.

Years and years ago, when I was a young line cook at a restaurant in New York, our chef brought a whole wild boar down to the kitchen. We all stood around staring at it with our mouths wide open. This was one of the top-rated restaurants in the city full of incredibly talented cooks, and not a single one of us had any idea how to start butchering this beast.

The ancient Dominican dishwashers came out of the dishpit, laughed at us for a minute or two and then had the boar skinned and portioned into primals in about an hour.

You better believe that we watched their every move. Knowledge comes from unexpected places and you’d be crazy to pass it up.

That’s what I love about this business: you’re never done learning. It’s up to us to always be observing and asking questions, and to never turn it off.

Our significant others may not love it, but it’s how we stay on top.

_{I’ve worked with thousands of food service operators. After explaining what our software does, I often hear this: “I need it, but…” followed by one of these two objections:}

_{“It takes too long to get it right, assuming we do get it right”
or
“My people won’t adapt to technology”}

_{Let’s call it ‘usability‘.}

_{So although I’m not a programmer, I do work closely with development. And I constantly push them focus on two things:}

_{– Simplicity}

_{– Ease of use}

_{When you analyze an app, POS system, or any other technology for purchase in your operation, pay special attention to usability. You are in a business where there’s never enough time, turnover is the norm, and technology adaptation can be bumpy. You don’t have endless resources to dedicate to analysis, integration, training, implementation, etc.}

_{It’s all about usability: that means not chasing every bell and whistle, but really focusing on the core objectives of what you want to accomplish. And it means finding solutions that you can adapt and integrate seamlessly and painlessly. All of that adds up to usability.}

_{I’ve told you there would be tips with my emails; these tips are some of the features that increase reciProfity’s usability. These may very well be what enables a successful deployment.}

You’ve already heard us screaming about how having accurate food costs is absolutely crucial to your profitability (and guess what? If you’re still using Excel or the back of a napkin to cost out your recipes, you DO NOT have accurate food costs and you desperately need to check out ReciProfity).

So now that you have all that great raw data, what do you do with it?  If you’re calculating your selling price by multiplying the food cost of each item on your menu by 3.3 to get a 30% food cost, that’s a great starting point, but you’re still leaving lots of money on the table.

The key to profitability is making sure that your actual sales mix, and not just your menu, averages out to your taget food cost. If your menu averages out to a target 30% food cost but 80% of your sales come from items with a 40% food cost, that’s a problem.

It’s like having the fastest grill man in the city but a veg guy who’s just out of culinary school and can’t keep up. The whole line is going to be in the weeds. Similarly, an unbalanced menu will never maximize profits. Each item needs to work in concert with all other items to create a sales mix that just plows money into your pocket.

The trick is adjusting your prices based on your real sales mix every month (ReciProfity makes this really easy), not based on your static menu.

Here’s how to turn your menu into a serious money maker:

At the end of each month, print out a sales mix report and categorize every single menu item into one of the following categories based on its sales volume and profitability:

• Winners: high sales, high profit margin (maximum 28-35% food cost depending on your sector).
• Plowhorses: high sales, low profit margin (over 28-35% food cost depending on your sector).
• Puzzles: low sales, high profit margin
• Losers: low sales, low profit margin

Do a little tweaking:

• Look back at your Plowhorses. Are you sure that some of them aren’t actually Winners in disguise? If you’re selling Dover sole with beurre noisette for $45 and it costs you $17, that’s a pretty nasty looking 37% food cost. But that $28 gross profit is probably higher than most of your other items so that’s a pretty sweet sale to make. Since we take cash to the bank, not percentages, go ahead and put that bad boy in the Winners
• Look at your high profit categories (puzzles and Winners). Do any of these items have obscenely high hidden costs associated with them that aren’t calculated as part of the food cost? An example is house-cured meats like pastrami that need 3 weeks in the fridge. The added electricity and cost of holding inventory can turn it into a low-profit item. This can also happen to items that require intensive prep relative to other items. Make sure these items are in the correct category.

Now let’s go through each category and see what we can do to optimize this menu:

• Your Winners are what pay your rent. Your customers love them and they put money in your pocket. You probably don’t have to do too much with this category since right now they sell themselves. Just be careful that, as you jigger around the rest of your menu, the Winners don’t get hidden or you might see some of them turn into puzzles. This is why it’s important to repeat this process every month or whenever you change your menu.

• Plowhorses bring customers through the door but you groan every time they’re ordered because all you see is a table full of people who aren’t really contributing to your bottom line. You can’t take them off the menu because your customers will rebel. But Plowhorses are a great opportunity. You can:
  • Up the price and turn it into a This works well in more expensive markets and higher-end businesses with a less price-conscious clientele.
  • Cut the food cost. Reduce the portion size or streamline the prep process. Just make sure this doesn’t mess up the product and turn it from a workhorse into a bum, or worse, turn off customers who come specifically for that product. Alternatively, eliminate waste (use ReciProfity to calculate differences between actual and ideal food cost to identify where the waste is), or find better prices from a new supplier.
  • Use it as a loss leader. You know that great bar a few blocks away that sells huge, delicious burgers for 6 bucks a piece? That burger isn’t actually making them any money, but it’s good enough to drag people in who then spend lots of money on high-margin items like sides and beer. That’s why the bar has a gorgeous copper draft system in full view with rotating microbrews on tap and why the waitresses push fries so aggressively. If this item is really what makes people beat a path to your business, don’t change it. Just accept that these items will be over your target food cost and need to be balanced out in your sales mix by other items with huge margins. Figure out what your “fries and microbrews” are and how to sell more of them (more on this in the Puzzles section).
  • If none of those tactics work, bury the item. Hide it in the middle of a group of other, more profitable items. It’s still there for customers who really want it but it won’t squeeze out the sales of your Winners and will free up prime menu real estate for your puzzles.

• Puzzles are items that you wish you could sell more of. Coffee, desserts, cocktails, and appetizers are almost always considered puzzles since they have fantastic margins and you can always sell more of them without canceling out sales of other items. They’re most likely what’s keeping you in business, especially if some of your entrees are loss leaders. Other less pleasant puzzles are dishes that might be close to the chef’s heart but never really caught on with customers. Here’s what you want to do:
  • Have your floor staff push the items hard. This doesn’t mean that you’re turning your waitresses into used car salesman, just that you’re making it as easy as possible for your customers to spend more money. You’d be shocked how many customers won’t order a coffee after dinner until somebody suggests it. Make sure the waitress is that suggester. Don’t ask if the table would like dessert, just drop the dessert menus as soon as the table is cleared. Offer cocktails and aperitifs as soon as guests are seated. Point out the high-margin appetizers before the table has even started reading the entrees.
  • Check the item’s placement on the physical menu. Is it buried in the middle of a busy section on the periphery of the page? Switch it with a workhorse that’s hogging the spotlight. Put it in a box. Highlight it. Move it to the top left of the menu, where the eye goes first.
  • Rewrite the description. Remember that even though you know the dish inside and out, customers have no idea how it looks or tastes. All they know is what you tell them. Change “fried” to “crispy” and add some flowery adjectives if that’s your style.
  • Sometimes you just need to make it better. You might love the dish, but you might also be too close to it to be able to keep your opinion impartial. Don’t beat yourself up, we’ve all been there. Do a tasting for a few other restaurant people who you trust and use their honest feedback to improve the dish.
  • If all else fails, kill it. Lots of puzzles are very close to the chef’s heart, so this can hurt. But if you can’t sell the item, you just have ingredients taking up valuable fridge space and most likely contributing to waste. It’s irrelevant how much money this item could potentially make you if nobody’s buying it.

• Losers are what nobody wants on the menu; not you, and not your customers.
  • There’s only one real tactic here: be ruthless and clean house.
  • The only reason to keep some of these Losers around is if they contribute to the business in a different way, like a hilariously named cocktail in a dive bar that makes the menu end up on Instagram or the only item for people with certain dietary restrictions, like McDonald’s Filet-o-fish.

This process might seem like a lot of work, but these techniques are what take your profitability to the next level. Avoid the temptation to just multiply food cost by 3.3 and you’ll leave your competition in the dust. Check out the reciProfity demo here to see how our new, cloud-based software makes you money and saves you time.

Menu Engineering Blog Post

You’ve already heard us screaming about how having accurate food costs is absolutely crucial to your profitability (and guess what? If you’re still using Excel or the back of a napkin to cost out your recipes, you DO NOT have accurate food costs and you desperately need to check out ReciProfity).

So now that you have all that great raw data, what do you do with it?  If you’re calculating your selling price by multiplying the food cost of each item on your menu by 3.3 to get a 30% food cost, that’s a great starting point, but you’re still leaving lots of money on the table.

The key to profitability is making sure that your actual sales mix, and not just your menu, averages out to your taget food cost. If your menu averages out to a target 30% food cost but 80% of your sales come from items with a 40% food cost, that’s a problem.

It’s like having the fastest grill man in the city but a veg guy who’s just out of culinary school and can’t keep up. The whole line is going to be in the weeds. Similarly, an unbalanced menu will never maximize profits. Each item needs to work in concert with all other items to create a sales mix that just plows money into your pocket.

The trick is adjusting your prices based on your real sales mix every month (ReciProfity makes this really easy), not based on your static menu.

Here’s how to turn your menu into a serious money maker:

At the end of each month, print out a sales mix report and categorize every single menu item into one of the following categories based on its sales volume and profitability:

• Winners: high sales, high profit margin (maximum 28-35% food cost depending on your sector).
• Plowhorses: high sales, low profit margin (over 28-35% food cost depending on your sector).
• Puzzles: low sales, high profit margin
• Losers: low sales, low profit margin

Do a little tweaking:

• Look back at your Plowhorses. Are you sure that some of them aren’t actually Winners in disguise? If you’re selling Dover sole with beurre noisette for $45 and it costs you $17, that’s a pretty nasty looking 37% food cost. But that $28 gross profit is probably higher than most of your other items so that’s a pretty sweet sale to make. Since we take cash to the bank, not percentages, go ahead and put that bad boy in the Winners
• Look at your high profit categories (puzzles and Winners). Do any of these items have obscenely high hidden costs associated with them that aren’t calculated as part of the food cost? An example is house-cured meats like pastrami that need 3 weeks in the fridge. The added electricity and cost of holding inventory can turn it into a low-profit item. This can also happen to items that require intensive prep relative to other items. Make sure these items are in the correct category.

Now let’s go through each category and see what we can do to optimize this menu:

• Your Winners are what pay your rent. Your customers love them and they put money in your pocket. You probably don’t have to do too much with this category since right now they sell themselves. Just be careful that, as you jigger around the rest of your menu, the Winners don’t get hidden or you might see some of them turn into puzzles. This is why it’s important to repeat this process every month or whenever you change your menu.

• Plowhorses bring customers through the door but you groan every time they’re ordered because all you see is a table full of people who aren’t really contributing to your bottom line. You can’t take them off the menu because your customers will rebel. But Plowhorses are a great opportunity. You can:
  • Up the price and turn it into a This works well in more expensive markets and higher-end businesses with a less price-conscious clientele.
  • Cut the food cost. Reduce the portion size or streamline the prep process. Just make sure this doesn’t mess up the product and turn it from a workhorse into a bum, or worse, turn off customers who come specifically for that product. Alternatively, eliminate waste (use ReciProfity to calculate differences between actual and ideal food cost to identify where the waste is), or find better prices from a new supplier.
  • Use it as a loss leader. You know that great bar a few blocks away that sells huge, delicious burgers for 6 bucks a piece? That burger isn’t actually making them any money, but it’s good enough to drag people in who then spend lots of money on high-margin items like sides and beer. That’s why the bar has a gorgeous copper draft system in full view with rotating microbrews on tap and why the waitresses push fries so aggressively. If this item is really what makes people beat a path to your business, don’t change it. Just accept that these items will be over your target food cost and need to be balanced out in your sales mix by other items with huge margins. Figure out what your “fries and microbrews” are and how to sell more of them (more on this in the Puzzles section).
  • If none of those tactics work, bury the item. Hide it in the middle of a group of other, more profitable items. It’s still there for customers who really want it but it won’t squeeze out the sales of your Winners and will free up prime menu real estate for your puzzles.

• Puzzles are items that you wish you could sell more of. Coffee, desserts, cocktails, and appetizers are almost always considered puzzles since they have fantastic margins and you can always sell more of them without canceling out sales of other items. They’re most likely what’s keeping you in business, especially if some of your entrees are loss leaders. Other less pleasant puzzles are dishes that might be close to the chef’s heart but never really caught on with customers. Here’s what you want to do:
  • Have your floor staff push the items hard. This doesn’t mean that you’re turning your waitresses into used car salesman, just that you’re making it as easy as possible for your customers to spend more money. You’d be shocked how many customers won’t order a coffee after dinner until somebody suggests it. Make sure the waitress is that suggester. Don’t ask if the table would like dessert, just drop the dessert menus as soon as the table is cleared. Offer cocktails and aperitifs as soon as guests are seated. Point out the high-margin appetizers before the table has even started reading the entrees.
  • Check the item’s placement on the physical menu. Is it buried in the middle of a busy section on the periphery of the page? Switch it with a workhorse that’s hogging the spotlight. Put it in a box. Highlight it. Move it to the top left of the menu, where the eye goes first.
  • Rewrite the description. Remember that even though you know the dish inside and out, customers have no idea how it looks or tastes. All they know is what you tell them. Change “fried” to “crispy” and add some flowery adjectives if that’s your style.
  • Sometimes you just need to make it better. You might love the dish, but you might also be too close to it to be able to keep your opinion impartial. Don’t beat yourself up, we’ve all been there. Do a tasting for a few other restaurant people who you trust and use their honest feedback to improve the dish.
  • If all else fails, kill it. Lots of puzzles are very close to the chef’s heart, so this can hurt. But if you can’t sell the item, you just have ingredients taking up valuable fridge space and most likely contributing to waste. It’s irrelevant how much money this item could potentially make you if nobody’s buying it.

• Losers are what nobody wants on the menu; not you, and not your customers.
  • There’s only one real tactic here: be ruthless and clean house.
  • The only reason to keep some of these Losers around is if they contribute to the business in a different way, like a hilariously named cocktail in a dive bar that makes the menu end up on Instagram or the only item for people with certain dietary restrictions, like McDonald’s Filet-o-fish.

This process might seem like a lot of work, but these techniques are what take your profitability to the next level. Avoid the temptation to just multiply food cost by 3.3 and you’ll leave your competition in the dust. Check out the reciProfity demo here to see how our new, cloud-based software makes you money and saves you time.