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Friday, June 22, 2012

Impact of Waste and Spoilage on Food Cost

Is waste and spoilage included in food cost? How do you calculate it? What about the waste in fish? How is that worked out?


The food cost figure does include waste and spoilage Badal. Your food cost totals will include the cost of any unusable trim from cleaning and butchering protein items and vegetables. In addition, any waste from overproduction is included. All spoilage is included.

Regarding the calculation question, your food cost formula will not change. It is always the same basic model:


Waste, spoilage, trim, theft, over production waste and improper portion control are all major sources of variance. Your variance reports should be setup in a manner which will help management reduce food cost through lower unfavorable variances.

I prefer to handle yield data from butchering and cleaning processes with standard recipes. Every fish butchering batch would have a different actual yield which should be compared to the standard. The ideal cost would flow from the standard yield. Any over or under trim is a variance.

Spoilage and waste should be calculated differently depending on the production phase. Raw food stock variance may be calculated using the purchase price times the weight or volume. Work in progress and finished goods should be calculated using the standard recipes. For example, if you had a fish soup spoil you would calculate the variance using the volume of soup discarded times the cost from the standard recipe.

Portion control systems which use production data, sales data and standard recipes will help you reduce the impact of poor portion control and theft. The trick is to closely monitor the food placed in production. Once highly perishable stock is placed in production, it should be sold quickly or tracked on a waste sheet.

A comprehensive variance report would show the traditional food cost model followed by a recap of variance. Routine trim yields will not be a part of this report. The report should highlight excessive loss due to poor quality protein items (those with yields below the standard), spoilage, production waste, and missing portions.

Tuesday, June 19, 2012

Lower Your Food Cost By Joining Our Group

Thanks to Jeff Marshall of the Arizona Republic for his article this week regarding group purchasing organizations. Dynamic Chains has members in Massachusetts, Maryland, Virginia, District of Columbia, Michigan, Illinois, Indiana, New Jersey and Texas. Our members have between 5 and 50 units and have a master distribution agreement with a major distributor.

For more information, please call us at (800)949-3295.

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