How to do costing in Hotels and Restaurants

Basic Food Costing Calculations and Other Costings Used in Hotels and Restaurants

Problem 1

A Chicken dinner consisting of chicken, a vegetable, two rolls, mashed potato & a beverage costs Rs 145 to produce. If a food cost percentage of 40% is maintained, what will be the selling price of this dinner?


• Food cost percentage is 40%

• The Cost to produce the dinner is Rs 145/-

• So the selling price should be 145/40*100 = Rs 362.5 or Rs 363.00

Problem 2

A food department incurred the following costs during a month-

Manager Salary-25000/-

Utility expenses-18000/-

Supervisor salary-15000/-

Equipment costs-5000/-

Waiting staff wages – 20000/-

The revenue for the month was 240000/-

Calculate the labor cost percentage.


Total cost towards Salary is Rs 25000+15000+20000 = 60000/-

Utility & equipment expenses should not be included in the labor cost.

Thus the labour cost % will be – 60000/240000*100 = 25%

Problem 3

A property had food sales of 100,000/-for the month. Its food inventory, purchases, etc. for the month are as follows-

Opening inventory- Rs 5000/-Purchases- 30000/-, Closing Inventory-6000/- Food for employee needs- 1000/-

• Find the property’s food cost % for the month.


• Total Sales 100000/-

• Total food consumed-5000+30000-6000 = 29000/-

Cost towards Employee Food 1000/-So, the net cost of food sold- Rs 29000-1000=28000/-

FCP = 28000/100000*1 00 = 28%

Problem 4

Calculate the cost of per servable kilo of one of your operation’s entrée dishes from the information provided below-

Purchase (original) weight- 12.8 kg

Servable weight- 7.6 kg

As purchased price- Rs 85 per kilo


•Yield is equal to 7.6 kilos (Edible portion-EP)

•Total cost as purchased (AP)-12.8 kg*85/- = 1088/-So cost per servable kilo will be Rs 1088/ 7.6 = 143.15 or Rs 143.00

Problem 5

Determine the portion cost of the menu item given the following data-

Cost of main ingredients- 450/-

Production loss- 10%

Seasoning & spices cost percentage is 8%

Portion yield -18


Yield is 90%. But when calculating Portion cost, have to take AP to cost i.e 450/-

Seasoning/Spice cost is 8% of Rs 450/- i.e Rs 36/-

So the total cost of production is 486/-

No. of portions — 18

So per portion cost is 486/18 = 27.00/-

Problem 6

The forecasted yearly sales of Sam’s steakhouse is Rs 800000/- Profit requirements for the year Rs 120000/- & non-food expenses (incl Labour) have been estimated at Rs 380000/-.

Assuming the forecasts to be accurate, what would the budgeted food cost percentage have to be, in order to ensure that the profit requirements are minimally met?


Revenue from sales after other costs is equal to Rs 800000- Rs 380000 or Rs 420000/- Of this Rs 120000/- is the targeted profit.

The Cost that can be incurred directly towards food is Rs 420000 – Rs 120000 = Rs 300000/-

So the targeted food cost % will be 300000/800000*100 or 37.5%