This is from a post from Ray Basso's forum
It was put up by Smoking Clone,a successful comp cook and restaurant owner.
He quotes from Linda Hopkins,a top comp cook and also a succesful restaurant owner.
Maybe it will be of interest to some.
I'm also a true believer that the 3 or 4 times cost is just a guideline. You find out what the market will bear, then you see if you can make money doing it. Our brisket sandwich runs over 35% food cost but pork comes in significantly less. It all works out and if it doesn't you'll be out of business pretty quick. Linda from Smokin Guns posted a proforma sheet years ago that still holds pretty firm today for what your percentages should be. Food costs are going to be closer to 35-40% on the average these days versus 30% they used back then. Here it is.
Re: figuring cost for food in a BBQ joint (4/1/2004 8:39:09 AM by Linda)
Hi T. It's exciting and fun to think about opening a restaurant, isn't it?
We price everything 3-4 times the food costs. Higher cost items like ribs we figure at 3 times and lower cost items at 4 times. Of course, you'll have to keep in mind what your market will bear. We visited many other restaurants and saw what they were charging for similar items. You don't want to price yourself out of your market, but you do want to get want your product is worth.
We also used the following formula to figure our financial projections. This formual came from a successful BBQ restauranteur who has been in the business for several years.
30% food costs
30% payroll (be sure to include yourself and pay yourself a decent wage)
5% rent
5% advertising
10% overhead (utilities, insurance, lawyers, accountants, etc.)
20% profit
If you know any of the above amounts, you can figure the rest. That we tell you how much you'll have to sell for the month or the year (depending on how you figure things).
Good luck. We haven't regretted our decision to open one time in the last two years. If you want to talk further, send me an email, lindahopkins @ kc.rr.com and I'll try to help.
Linda
Smokin' Guns BBQ
North Kansas City, MO
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