KNOW YOUR RESTAURANT’S HEALTH

Your Cost of Goods Sold, or COGS, is one of the best ways to understand your food spend. It is a mathematical look at the amount of money you spend on food. When compared to your sales, it is the best way to determine the health of your restaurant. If spend is flat and sales increase… things are great. If spend increases, but sales do not? They are not. The formula is easy:

COGS: (Starting Inventory) + (Purchases) – (Ending Inventory) = COGS

But without an accurate inventory, you are not going to have an accurate COGS. It is like trying to bake a cake, but just eyeballing the amount of flour you put in. It might work, but it will be far from perfect. And if way off, it can be disastrous. The Takeaway: Know your COGS weekly, not monthly. Make weekly purchasing adjustments to drive higher profitability.