What are Restaurant COGS?
COGS or cost of goods sold are the materials that are directly attributable to your product. In the case of restaurants, cafes, and Bakeries this is ingredients that make up your food and beverage.
COGS come right after your revenue on the profit and loss statement.
Revenue - COGS = Gross profit.
(Revenue - COGS) / Revenue = Gross Margin
These are extremely important to know as it lets identifies how much it costs to even make your dishes and also to know what percentage of revenue is left for all your other expenses.
"Why should I care about Restaurant COGS?"
COGS in the restaurant industry is extremely important to track. This is because there is a lot of data already out there on what your general COGS should look like. With restaurants generally starting with low margins you need to stay competitive by keeping your COGS lower. They can get out of hand very quickly!
Accurate COGS calculations are extremely important. With inaccurate data you may be led to believe that you have great margins when in fact you are over ordering produce which is causing waste. Many restaurants ask why are we profitable but have no cashflow? Often times it is bad data and with COGS it is easy to lose track of the costs.
Components of COGS
Below are the normal restaurant COGS that go into your Profit & Loss.
Food COGS
-Dry Goods
-Produce
-Dairy
-Poultry
-Seafood
-Meat
Beverage COGS
-NA Bev (Non-alcoholic Beverages)
-Beer
-Bar Consumables (Ingredients that go into mixed drinks such as limes)
-Liquor
-Wine
Generally speaking the above food costs roll up to two accounts on the balance sheet when purchased until they are used in a dish and can be expensed out. These two inventory accounts are
Food Inventory
Beverage Inventory
Thanks for reading the Kitchen Cashflow Blog produced by Exec Financials, PLLC.
Stay tuned for how to calculate COGS and tips for using COGS strategically.
If you would like more information on restaurant finances please subscribe to our blog. If you would like Exec Financials, PLLC to take over your day to day finances. Please contact us below.
Comentarios