Suppose you have a new board treasurer who wants to better understand your food service financials. Via your manager/director, he needs your food cost per camper, elaboration on the rise in your food expenditures over the past two or three years, and food price forecasts for the next fiscal year. What tools do you have to adequately calculate your food cost? Faced with these challenges, here are some tools I developed to help answer those questions and plan for upcoming food budgets.
Know Meal Fees and Guest Numbers for the Full Fiscal Year
When camps advertise their fees, typically it’s for the full cost of a summer camp session rather than itemized camp charges for program, accommodations, food service, etc. However, your camp’s overall budget should have a line item for each of these types of revenue, with food sometimes listed as “Food Service Fees,” and also a line item for these categorical expenditures. To accurately determine your food sales are fairly priced and profitable, you must find out what your camp is charging for meals — even if it’s one standard meal fee for the week for each individual camper. You will need to find out the number of youth attendees and adult attendees if your camp charges a lump sum for meals per person.
Thomas Truitt, a 33-year veteran of the camp industry and executive director of White Oak Conference Center, host of Summer Salt Camps, gave me this tip: “Charges for food and accommodations should always be separated in your pricing schedule and in your budget, instead of having a combined room and board charge. Though you may not advertise this in the overall camp fee, this allows you to negotiate discounts for accommodations only. You should never negotiate your food charges, which cuts into your profit, or could even cause you to lose money.”
Track Food Cost and Document Data
Build cost per unit and cost per portion into your inventory form, and I suggest first doing a complete inventory of all foods in the kitchen divided into pantry, freezer, and refrigerator. Using each vendor invoice for the current year, note unit and portion cost for every food product ordered up to the current month, so you can track food cost for the year.
Next, I suggest creating a multifunction spreadsheet as a tool for tracking food cost, a weekly inventory, order, and product delivery confirmation form, along with columns for input regarding cost per case/unit, per portion cost (refer to the example in Figure 1 below). This multipurpose form will ensure you have all this valuable information in one place.
Then create a separate master list for breakfast, lunch, and dinner items’ cost per unit and per person. Place the per-portion data beside the corresponding item within your Breakfast, Lunch, and Dinner Plate Cost spreadsheets (see Figure 2). After adding each item cost for each standard meal, you will be able to see a total meal cost. For example, tabulating all the meal costs for the seven total breakfasts served each week determines the total cost per guest for breakfast per week. Dividing the total by the seven meals gives you the average cost for breakfast per camper.
To determine inflation rates over years, you can use information from the US Inflation Calculator, usinflationcalculator.com/inflation/food-inflation-in-the-united-states/ (CoinNews Media Group, 2018), and for anticipated cost projections for the year, refer to the USDA Consumer Price Index site, which measures projected inflation rates for upcoming years. Go to ers.usda.gov/data-products/food-price-outlook/ for 2019 rates (USDA, 2019).
Calculate Your FoodCost Percentage
Let’s say, for example, your breakfast average cost per camper is $3.00, and your camp charges $8.00 for breakfast. To determine your food cost percentage, divide the cost by the sales, then multiply by 100, and convert to percentage.
$3.00/ $8.00 = .37
.37 X 100 = 37% Food Cost for Breakfast
What percentage should your food cost be? It depends on your clientele, operation style (quick prep foods vs. in-house prepared), and your menu items. Many food industry professionals suggest aiming for 28 percent to 35 percent (Marzullo, 2018).
According to Jonathan Deutsch, PhD, “One way to ensure that your prices are in line with that food cost is to triple the food cost of the item” (Deutsch, 2011). He also shares that strictly doing this can elevate your prices too much. His suggestion is to balance your menu. Where some menu items are priced higher, include lower-priced menu items to balance out your charge. You may serve roast at a 35-percent cost, but also chicken at a 25-percent cost and pasta at a 22-percent cost. My suggestion is to apply this to entire meals as well. You will see on my Breakfast Menu Plate Cost sheet that some breakfast menus are significantly lower in price, making the average price lower for the customer.
Determine Kitchen Labor Needs Based on Your Meal Service
Labor costs should be between 25 percent and 40 percent of your food service revenue (Gartenstein, 2019), depending on your type of operation. If you have more premade, ready-to-use food items, your labor cost should be lower, while operations with more in-house baked and prepared foods would have a heavier labor cost but a lower food cost.
Food Cost Plus Labor Cost Equals Prime Costs
According to Steven Buckley of Small Business Chron, prime costs “should generally be in the 60 percent to 65 percent range.” It is up to you and your camp management how much of this percentage is food and how much is labor, which is reliant on your meal preparation style, so long as you are content with the profit.
With your admin team, ascertain a fair profit margin percentage above your food and labor costs. Confirm your food cost based on your vendor charges and your labor cost for your meal prep requirements. Your total of these costs — your prime cost — if not generally more than 60 percent, would be your budget. If it exceeds 60 percent, you might consider adjustments to your meal prep style, your food product choices, or your labor force. Profit is not our purpose for serving our campers, but a healthy amount is fundamental to grow and serve them better.
Buckley, S. (2019, March 11). Common food & labor cost percentages. Small Business Chron. Retrieved from smallbusiness.chron.com/common-food-labor-cost-percentages-14700.html
CoinNews Media Group. (2018). US inflation calculator. Retrieved from usinflationcalculator.com/inflation/food-inflation-in-the-united-states
Deutsch, J. (2011, February 9). Pricing formula. Restaurant Business. Retrieved from restaurantbusinessonline.com/advice-guy/pricing-formula
Gartenstein, D. (2019, March 8). Food service industry: Labor cost standards. Small Business Chron. Retrieved from smallbusiness.chron.com/food-service-industry-labor-cost-standards-13911.html
Marzullo, D. (2018, December 7). 4 things to know about your food cost percentage. Upserve Restaurant Insider. Retrieved from upserve.com/restaurant-insider/4-things-know-food-cost-percentage/
US Department of Agriculture. (2019). Food price outlook. USDA. Retrieved from ers.usda.gov/data-products/food-price-outlook/
Kimberly Whiteside Truitt is former food service manager at Camp Gilmont and Camp Zephyr, and has served on Camping Magazine’s Editorial Advisory Committee. Kimberly was a presenter at the 2018 North American Food Service and Maintenance Conference.