Chef math

Cattle producers throw lots of terms around–like average daily gain and weight per day of age–that are fairly well understood by those in the industry. These are calculations we do often and understand their importance to our business.

Folks in the foodservice industry also have some math they do on a regular basis. “Food Cost” is a very common one. Simply put, it refers to the cost of the food on the plate as a percent of the menu price.

For example, an entrée that costs the restaurateur $7 and is on the menu for $21 has a 33% food cost. It’s a well understood metric in the foodservice business and most chefs measure their performance and establish their menus based on food cost.

Of course the danger there is that those percentages don’t deposit in the bank very well. It would be like measuring your success as a cow-calf operator by looking at weaning weight as a percentage of cow weight. Probably an important number but dollars of weaning-weight sold is what you take to the bank.

Overcoming the “Food Cost” objection is one of the challenges for beef in growing market share over cheaper protein options on a restaurant’s menu. For example, chicken can produce a very attractive food cost. An 8-oz. boneless chicken breast could easily have a cost of $1.50/portion. When put on the menu at $12, the chef gets a food cost of 12.5%, a number any chef would be proud of. On the other hand, an 8-oz. portion of CAB® brand sirloin might have a cost of $5/portion. When put on the menu at $18, this entrée has a food cost of 28%, double that of the chicken. To the chef scrutinizing food cost, it looks like chicken wins.

But wait! That chicken order generated $10.50 of profit. The beef order brought in $13.

This math seems pretty simple, but getting many chefs and restaurant owners to turn away from relying mainly on food cost is a huge challenge. It’s one you can bet the sales staff here at CAB is always working on for you!

~Mark

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