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Calculating hidden food costs

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Question:

I understand how to use a Q factor in costing, but how do you figure out what it is? This is not explained anywhere.

– Lisa, Oklahoma City, Okla.

Answer:

Knowing the cost of all of the food and beverage you serve is vital to maintaining good controls. When you cost a recipe accurately, you can be assured that the costs of the ingredients you serve are accounted for as a reasonable percentage of the menu price. For example, if you sell a steak entree for $18 and the components cost you $6, you know that that dish will run at a 33% food cost.

But there are some food items that are consumed but not sold—bread and butter at many restaurants, as well as condiments like ketchup and hot sauce; syrup and jam at breakfast establishments, chips and salsa at a Mexican restaurant, and so on. Depending on the establishment, these items may be more elaborate and could include soup or salad, relish tray, or side dishes.

In order to account for these items and make sure that menu prices are adequate to cover the cost of food that you are giving to guests but are not selling per se, a Q factor is established. This Q factor, also called a cover cost, is an estimate of the typical cost of food a guest will consume outside of listed menu items. In some restaurants, the Q factor may be only a few cents for items like salt, pepper and hot sauce. In other restaurants, it may include costly bread service and other complimentary items and may cost a few dollars.

It is important to remember that each restaurant’s Q factor is different, and there is no standard. To cost it, you’ll need to observe guest behavior and make a conservative estimate on what a typical guest will consume. Next, add that Q factor to your food cost for every entree (not every menu item) in order to make sure you have it built in for each guest. To go back to the steak example above, if you add a Q factor of $1 to account for a roll, butter and steak sauce, then your real cost is $7. If your goal is to run a 33% food cost, you should really be selling that entree for $21 rather than $18. Then, monitor that Q factor for accuracy and adjust as needed.

More on recipe costing and Q factors here

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