This is recorded as an asset and represents the total dollar amount of product that you have on your shelf. In doing this, you’re able to catch any maintenance issues before they become a bigger problem.įinally, remember that your total inventory dollars live on your Balance Sheet. So, while you’re counting, you can simultaneously perform a facility maintenance check. This includes all the equipment, the storage areas, walk-in freezers, etc. Your inventory should be a total of all the food product, nonalcoholic beverage, beer, wine, liquor, (Note: For QSRs we suggest including your packaging in this as well), etc.Īdditionally, when you count inventory you touch everything inside the restaurant. Why should restaurants count their inventory?Ĭounting inventory is the best way to get an accurate representation of what your true usage is. Your inventory is not factored in (because you do not take it so you don’t have an accurate number to insert into the formula). In doing this, understand that the formula still applies, but this means your cost is simply based on the following: Your purchases minus your credits, divided into sales. If your restaurant doesn’t count inventory, change the opening and ending inventory to “zero.” You should have corresponding cost categories with your master sales departments therefore, the percentage is based on the basis of your specific sales.įor operators who count inventory by the week, this formula is the most accurate way to calculate the product costs you’ve gone through during the week. When reviewing the COGS formula, it’s important to understand that the basis of your sales is the sales for that respective cost basis, meaning your food cost is a percentage of food sales, liquor cost is a percentage of liquor sales, etc. The final number paints a picture and starts to tell you how much money you’re making on the food and beverage you’re selling.Ĭalculate your restaurant cost of goods sold with the COGS calculator below! Simply enter the dollar value of your opening, purchases, credits, ending inventory and sales…then click “Calculate COGS” to see your restaurant’s cost of goods percentage!
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