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As a restaurant manager, you are likely aware of the importance of controlling your costs. But how do you know what percentage of your revenue should be allocated to Cost Of Goods Sold (COGS)? Is there an optimal number that will help ensure profitability? In this blog post, we’ll explore these questions and provide some strategies for improving your COGS performance so that you can maximize profits. Read on to learn more!
Understanding Cost Of Goods Sold (COGS)
– COGS is a term used to describe the cost of producing the goods or services that your restaurant offers. This includes raw materials, labor, and overhead costs associated with each item on your menu. In addition to these direct costs, there are also indirect expenses such as advertising or repairs that should be taken into consideration when calculating COGS.
Calculating Your COGS As A Percentage Of Revenue
– To determine what percentage of revenue should be allocated to COGS, you’ll need to calculate it as a proportion of total sales. Start by adding up all direct and indirect expenses for each item on your menu and dividing it by total sales. This will give you the overall COGS percentage for your restaurant which can then be compared to industry standards.
Strategies To Improve Your COGS Performance
– After you’ve calculated your COGS percentage, there are several strategies that can be employed to help improve your performance. These include reducing waste, maximizing efficiency in the kitchen, and negotiating better deals with suppliers. Additionally, it is important to track and analyze your COGS over time so that you can identify patterns and make informed decisions about how best to reduce costs.
– Calculating the right percentage of revenue to allocate to Cost Of Goods Sold (COGS) is essential for a successful restaurant business. By understanding what goes into calculating this figure as well as following some simple strategies to improve performance, you can ensure that you are setting yourself up for success.