Food, Beverage and Labour Cost ControlUnit 1

September, 2012Presenter: C. Bogle

The Cost-To-Sales Ratio: Cost Percent

Food service managers calculate costs in dollars and

compare those costs with sales in dollars. This enables them

to discuss the relationship between costs and sales,

sometimes described as the cost per dollar of sale, the ratio

of costs to sales, or simply as the cost-to-sales ratio.

FORMULA FOR CALCULATING COST-TO-SALES RATIO

COST \SALES = COST PER DOLLAR OF SALE

COST \SALES x 100 = Cost%

Extended Formula

Food Cost \ Food Sales x 100 = Food Cost%

Beverage Cost \ Beverage Sales x 100 = Beverage Cost%

Labour Cost \ Total sales x 100 = Labour Cost%

COST PERCENTAGE FORMULA

Cost \ Sales x 100 = Cost%

Cost \ Cost% (expressed as a decimal) = Sales (or sales price)

Sales x Cost% (expressed as a decimal) = Cost

COST PERCENTS ARE USEFUL:

They provide a means of comparing costs relative to sales for two or more periods of time

They provide a means of comparing two or more operations

NB: Because food cost is variable, it increases and decreases with sales volume.

ReferenceDittmer, R. Paul & Keefe, J. Desmond. (2009). Principles

of Food, Beverage, and Labour Cost Controls. John Wiley & Sons, INC. New Jersey