How to Calculate the Cost of Food for Your Culinary Business Venture

Are you hungry for information about launching your food-service small business? While there’s a lot of shared information to get started across all industries, the food industry poses unique opportunities and questions. One of the most common we see is how to calculate the cost of food. Here’s one approach from small-business expert Sam Ashe-Edmunds, who dishes out food-cost calculations into nine steps to help ensure that you’ll be able to keep a consistent menu, please customers and remain profitable.

 

Here’s what he has to say:

 

Step 1: Pick a dish to start and list all of its ingredients – even condiments and garnishes. You’ll want to make sure that the portion for each dish is the same so that it always costs the same.

 

Step 2: Calculate the cost of each ingredient. Take a head of lettuce, for example. If it costs 75 cents and you get 30 leaves, the lettuce cost for a dish that includes one lettuce leaf would be about 2.5 cents. Ashe-Edmunds reminds us to include a proportion of any expenses directly related to purchasing foods, such as delivery fees or interest.

 

Step 3: Add up the costs of all the ingredients for the dish, but don’t include costs for labor or actually serving the dish.

 

Step 4: To start figuring out if you’ve priced the meal right, divide the menu price by the food cost to calculate the percentage of the price that comes from food. If you charge $10 for a meal for which food costs are $5, then your food cost is 50 percent.

 

Step 5: Now, you’ll want to determine overhead cost per meal, which includes everything not related to food that’s required to run your restaurant. This includes things such as labor, rent, marketing, taxes, etc. So, consider what it will cost to run your restaurant on a daily basis – then divide that number by the number of customers you think you’ll serve every day. If your overhead is $1,000 per day and you have 200 customers each day, your overhead per person is $5.

 

TIP: Keep employee meals and food theft in this overhead figure as well, because they’re not included as direct costs to serve a meal but can’t be left out.

 

Step 6: Using your overhead costs as a guide, decide your ideal food-cost percentage. If you charge $10 for a meal and your overhead cost is $6, then your food costs can’t be more than $4 to break even. Want a $2 profit per meal? Then you’ll have to charge $12 for that particular dish.

 

Step 7: Take a look at the prices listed in your menu to figure out if they’ll cover your overhead and food costs – and if you’ll be able to make a profit. So if you’ve calculated an ideal food-cost percentage of 20 percent and a dish uses $4 of ingredients, you can’t sell that dish for any less than $20.

 

Step 8: You may need to calculate different food-cost percentages for different services or items, such as a breakfast menu versus dinner menu, because of different requirements – some less, some more – to satisfy each dish.

 

Step 9: Finally, examine your sales by item to determine if your food-cost percentages are adequate to keep your restaurant in business. If it turns out you’re selling at primarily a low cost, you might need to raise prices (or lower food costs) to be profitable.

 

TIP: Get a more complete picture of your food costs by checking out total food costs per service and dividing them by total sales. Then you won’t have to calculate the actual cost of each menu item.

 

 

http://www.sba.gov/community/blogs/how-calculate-cost-food-your-culinary-business-venture

Selling Food and Drink Online: Product Descriptions Top Tips

Selling food and drink online can sometimes mean exercising creative muscles you might not have used in a long time. If writing about your products isn’t something that comes naturally, fear not! We’ve put together some top tips for writing product descriptions – inspiration guaranteed.

Whether you’re about to start selling online for the first time or thinking of fine-tuning your existing online shop, here are 5 key tips to help you overcome that dreaded writers block.

 

1. Who are you writing for? 

If you’re an established business or are used to selling face-to-face, you might already have a clear picture in your mind of who your target customer is. Perhaps your typical customer is a health-conscious foodie who knows her shallots, or the discerning husband shopping for the perfect birthday gift for his  (incredibly lucky) wife?

Having a clear idea in mind of who you’re writing for before you get started and this will make the whole process of writing product descriptions much easier.

If you don’t have any direct experience to draw from, who can you imagine buying your products online? Who would your dream customer be?

 

2. Answer their questions 

Now that you have an image of your customer in your mind, imagine what would be going through their head before buying your product online. What would they want to know? What questions would they have? The health-conscious foodie might want to know about the exact provenance of your ingredients and suitability for her special diet. While the gift-hunting husband might be more concerned about whether your will arrive in drool-worthy packaging (and, whether you can save his bacon by delivering the goods on time).

Make a list of questions you think your customer might ask, and ensure you answer these key points in your product copy.

 

3. Know what makes you different 

When you’re selling food or drink you’ve produced yourself, it’s sometimes easy to take the small details for granted. Of course you bake your biscuits using traditional techniques! Of course your eggs are free range! Why wouldn’t you use British butter, organic flour, hand-decorate your creations…..and ship them in a hand-illustrated box?!

These exquisite details can make all the difference when it comes to differentiating your products and standing out from the crowd online. So don’t forget to include them when writing product descriptions for your shop.

 

4. Don’t be afraid to sell

Remember that when buying online, customers don’t have the opportunity to pick up, smell or taste your wonderful creations. So while it’s absolutely true that your product photographs have a crucial role to play in grabbing browsers’ attention and showing off your wares, your product descriptions need to fill in any gaps. Imagine you’re selling face-to-face at a fair or market – what would you be telling potential customers there?

Whether it’s suggestions for how to use your product, the fact it’s a Great Taste Award Winner or sharing praise other customers have lavished on your range – don’t be afraid you’re being “salesy” – just tell it like it is.

 

5. Tell stories

For many shoppers, buying from independents (whether online or offline) is a deliberate lifestyle choice. Many will want to support small businesses and value all the little details that make buying from you a special experience they just won’t get from a larger retailer. So don’t miss the opportunity to give these customers what they want! Use your product descriptions to paint a picture and draw potential customers in.

Whether it’s the fact you make your gourmet marshmallows in small batches from your family kitchen in Cornwall or that you’re a fourth generation cook using recipes handed-down by your Great, Great Granny….. if stories form an important part of your brand,  weave them throughout your shop.

 

 

http://blog.yumbles.com/2014/07/01/selling-food-and-drink-online-product-descriptions-top-tips/

Charlie Bigham: Cooking up a successful food business

Inspiration can often come from strange places. For UK ready meals boss Charlie Bigham it was being unable to sleep at the border between Iran and Pakistan.

Mr Bigham was 28 years old at the time, and he and his then girlfriend were travelling from the UK to India by camper van.

"It was very, very hot, and we were in a really tough place," he says. "I couldn't sleep, so I just laid there restlessly thinking about what I was going to do for a living when we got back home.

"I decided there and then that I was going to set up a food business, and it was going to look a bit like this."

Work experience

Mr Bigham had previously worked as a management consultant in London, before he and his girlfriend quit their jobs to go travelling for nine months.

His ambition was to set up his own company when they returned to the UK, and now he had his idea - he was going to establish a business that made upmarket ready meals.

Mr Bigham was not going to let the fact that he had never worked in the food industry before put him off, and instead he decided he would quickly set about gaining the knowledge and skills he needed.

And so upon his return to the UK he got a job at a delicatessen in London's fashionable Notting Hill area.

"I've always been really interested in food, but I had no food industry experience, so I knew I had to get some cheese under my fingernails, so to speak," he says.

Business inspiration can come from unlikely circumstances

He ended up spending almost four months at the deli, and at the same time did lots of research, and working on recipes.

"It became clear that the idea of making meals which are then sold via shops was a very good idea for a business because it was a massive market, yet one which was very straightforward to start up in," says Mr Bigham.

"I knew we could start under the radar before any bigger rivals could crush us, and then build quite quickly."

'Knocking on doors'

In November 1996, 11 months after his return from travelling, and now married to his girlfriend, Mr Bigham launched the business with £25,000 of savings, calling it simply "Charlie Bigham's".

To begin with, it was just him and one chef based at a small facility in London's Park Royal business estate.

Mr Bigham says: "We had just three product lines to start with - zesty Caribbean lamb, Cajun chicken with salsa, and salmon with a dill and cream sauce. I think we made just 20 meals in total in that first week."

To get sales moving, Mr Bigham, now 47, says he simply started "knocking on people's doors".

"I went round all the posh delis in London, and the big department stores with food halls. Everyone was approachable, and said, 'Yeah we'll give you a go'.

"I just had to be mildly persuasive, and I'm not a salesman.

"What greatly helped us, is that you have to remember that at the time, most ready - or convenience - meals, as I prefer to call them, were pretty dreadful.

Charlie Bigham's food is now stocked at Waitrose, Ocado and Booths

"We were one of the first to make quality ones without anything artificial. This set us apart and made shops interested in stocking us."

But while selling to posh stores in London was pleasing, Mr Bigham realised that in order to grow the business he needed to win a contract with one of the UK's supermarket groups. And so he cold-called Waitrose.

"I just picked up the phone and rang the Waitrose switchboard. I managed to persuade a lovely woman on the phone to put me through to a buyer. I got a meeting, and the buyer said she would give us a go."

Charlie Bigham's meals have been stocked by Waitrose ever since, initially at 40 stores for a successful trial period, and then nationwide. Online supermarket Ocado, and Booths, the north of England supermarket chain, have since followed suit.

Good timing

The company now employs 200 people across two sites at the Park Royal business park, and has an annual turnover of £20m, which is now growing at 19% per annum. 

Charlie Bigham's best sellers

1 Fish pie

2 Steak and ale pie

3 Lasagne

4 Moroccan chicken tagine

Mr Bigham says his former job as a management consultant helped him manage the company's growth over the past 17 years.

But he is the first to admit that luck and good timing played a major role in his success.

"The only way you can ever set up a successful business is to be lucky," he says. "It is the thing you need more than anything else. Anyone who says otherwise is just lying."

Mr Bigham says that most important piece of luck was all to do with timing.

"I set up a food business just as interest in food was blossoming in this country. Suddenly there was a wealth of TV chefs, and the national newspapers all added food sections at weekends.

"And the supermarkets were all being brave and looking outwards towards new suppliers. There was no planning or forethought about all this on my part, it was pure luck."

'Hugely privileged'

Mr Bigham today gives himself the job title "chairman and creative director". This followed his decision back in 2010 to bring in someone else to handle the chief executive role.

The company has no plans to start exporting

"It has enabled me to focus on the bits of the business I'm really interested in - product development, and the big strategic picture - working out plans for the next three to five years," he says.

"The bit in the middle [the day-to-day financial decisions etc] I'm easily bored by, and is best done by someone else."

Looking ahead, Mr Bigham says the company has no plans to start exporting, because the freshness, and therefore limited shelf life of his products, makes it too expensive.

Nor does he ever intend to move production away from London to somewhere cheaper, because he says he is loyal to his hard-working staff.

"I'm proud of what we have done to date, but I'm in no way complacent. Owning your own business is a hugely privileged position to be in, because I work with people I have chosen - not many people can say that."

 

http://www.bbc.co.uk/news/business-24434154