Kudos to Wayne for pointing out the missing transfer info on the FCC Blog posts.
Hello Joe,
I found your article on Food Cost Basics interesting for a sole restaurant but in a larger scale property with more than one restaurant let's not forget to included FOOD TRANSFERS from one restaurant to another restaurant in your Food Cost Percentage Formula.
Inventory changes must be taken into account monthly as to either add/subtract the cost from your total cost prior to the final cost percentage. The difference is when an outlet/restaurant has their own stock (versus the commissary or storeroom) and the outlet/restaurant stock has decreased this month then the difference between last month's inventory and this month's decreased inventory presents a debit of the difference to be applied to the overall cost.
The same in respect to an increased inventory then a credit should be applied to the overall cost for the amount of the inventory difference since the cost remains with the stock in the outlet.
I have found that most of the time when food costs increase there is a specific reason whether a special menu for a holiday such as Easter or perhaps an increase is needed in pricing to offset the continual increasing costs of food/beverage or especially when an outlet/restaurant is stock piling unsold food which has no revenue against rather than store the product in the commissary/storeroom until needed provided a monthly food inventory is only completed on the commissary/storeroom itself and not the outlet(s).
In that case the outlets should keep food at a minimum at the end of the month.
Wayne
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