Read on to learn how the A/T report works...
Perform the following calculation:
Example: Let’s say a restaurant only sells bacon burgers. The recipe is:
Overall cost is (.30 + .10 + .10), or .50 cents to produce each bacon burger. When the restaurant sells 200 bacon burgers, its theoretical food cost is $100.
Perform the following calculation:
Inventory values at the beginning of week + other purchases of inventory – inventory values at the end of the week = Actual Food Cost
Bacon Burger example:
The Actual food cost for the bacon burgers is ($180 + $70 – $195) = $55
Actual Food Cost – Theoretical Food Cost = Variance ($75 – $55 = $20)
When you compare the Actual and Theoretical costs in the example above, the restaurant spent $20 more on food than it should have. (In other words, the variance was $20, which is an excess in spending.)
Next, let’s use the available reporting tools to locate and eradicate any source(s) of excess cost. In this example, was it the hamburger patty, the hamburger bun or the bacon that contributed to the excess cost resulting in lost profits? Alternatively, perhaps it was the combination of the three ingredients. For the best results, you will want to locate the root cause of the loss, and then fix it.
This is another example which demonstrates how important restaurant management software can be for a growing company. This software enables the entire operation to easily develop discipline and efficiency while at the same time decreasing your bottom line for food and labor costs by 2-5% or more. This is an important cost saving technique for food costs. Delve into the savings by checking out this CrunchTime article and video.