Foodcost  

Definition 

"Foodcost" is a term from the hospitality industry and refers to the costs associated with the production of food. Foodcost are used to analyze the financial performance and profitability of e.g. restaurants or hotels.

Foodcost calculation

Foodcost is an essential part in budgeting and cost management in the food sector. Usually, foodcost is expressed as a percentage of sales. Foodcost is the direct cost of food required for the preparation of meals such as the cost of:

• Ingredients
• Spices
• Packages
• Delivery costs

Foodcost is calculated by looking at the total value of food sold during a given period and breaking down the direct costs incurred to prepare that food. This value is then set in relation to sales to determine the Foodcost.

High food costs are mostly caused by inefficient processes, excessive purchase prices or in connection with food waste. Therefore, food costs can be reduced thanks to efficient food procurement, control of food waste, and effective warehouse management.

Importance of Foodcost for the catering industry

Foodcosts have a direct impact on the profitability of food service operations. Foodcost must therefore be effectively controlled to remain competitive and ensure business success. Optimizing foodcosts can reduce costs and maximize profits while ensuring the quality of dishes.  

Artificial Intelligence and Foodcost 

Foodcosts such as costs from over-ordering, misproduction, wrong portioning or out-of-stock can be reduced with artificial intelligence. By using AI, large amounts of data are analyzed and used to determine forecasts for production planning. This optimizes food preparation and reduces food costs.