There are three common methods restaurants use for tracking COGS and measuring a restaurant’s ability to stay within budgeted targets.  I recently got into a discussion with a restaurant owner about this and I thought it might be helpful to share.  I will compare them using ski run difficulty rating system:

  1. Green Circle (easiest, least accurate) —-  You don’t count inventory but just enter the purchases you actually make and use that number for your food cost for the period (you assume that over the course of a few weeks, all the inventory is used and the cost is accurate within an acceptable margin of error.)  The COGS % goal is just a fixed % by location (regardless of what you sell or how much of it).
  2. Blue Square (intermediate, more accurate) —- You count inventory every week and you enter all your purchases in and a very accurate weekly COGS number is produced with the following formula:  Beginning Inventory + Purchases – Ending Inventory = COGS).  The COGS % goal is just a fixed % by location (regardless of what you sell or how much of it).
  3. Black Diamond (advanced, very accurate) —- You count inventory every week and you enter all your purchases in and a very accurate weekly COGS number is produced with the following formula:  Beginning Inventory + Purchases – Ending Inventory = COGS).  The COGS % goal is based on what you sold and how many of each (this is called P-Mix or Product Mix and requires that you track recipe costing cards).   The combination of P-Mix and Recipe Costing Cards produces Theoretical Food Cost for the period which is a very accurate COGS % goal.

With Restaurant365 you can do any of the three.  This is one of the benefits of having a flexible, cloud-based restaurant management system (SAAS).

Morgan Harris | Co-founder | Restaurant365