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Monday, March 19, 2012

Food Cost Benchmark Question

Dear sir,

I found your website very interesting. Please, kindly could you explain the cost of current food from kitchen (also banquet & f&b). What's the percentage food cost target for each?

I got a little confused whether it's 32% or 33% or 35%. (and also is banquet 24% or 28%?)

Thank you,

The target food and beverage cost percentages differ depending on your specific company's budget. Generally, it is wise to run an overall cost of goods sold of 30% or lower. Take all costs of both food and beverage and divide by the total food and beverage revenue. I believe 35% would be too high.

Historically, many operators have set a food cost target of either 32 or 33% and a alcoholic beverage cost target of 18 or 20%. If 3/4 of your volume is food sales, you would achieve the 30% or lower objective.

The reason banquet food costs are often much lower is the inclusion of many non-food items in the contracted BEO revenue. Personally, I like to calculate a profit per guest on BEO reports. Ideally, the revenue for each event should be sufficient to cover all costs (including flowers, music, special decorations, etc.) and allow for a fair profit.

1 comment:

Mark Sievers said...

Great comments and I totally agree. Too oftern I see food costs that are higher and not thought through.

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