Calculating GP for menus based on food cost.
Before you can cost something on your menu you will need some information first:
- Total cost of the ingredients used in a dish
- The target GP the business wishes to achieve
- Whether a recipe makes a certain number of portions such as a lasagna, tray bake pudding, or stew (Divide the number of portions against the total cost = e.g 1 tray of lasagna costs £20.00 and produces 32 portions. Calculation: £20.00 / 32 = £0.625 per portion. In business economics, you always round up any cost to the business so this would be £0.63)
Our example: Lasagna with garlic bread, mixed salad & peas.
Lasagna portion = £0.63
half a ciabatta bread = £0.50
30g butter (for the garlic butter) = £0.27
50g mixed salad = £0.30
Drizzle of honey & mustard dressing = £0.10
100g garden peas = £0.30
TOTAL DISH COST: £2.10
How to calculate the GP
There are 2 main ways to calculate GP for menus when doing costings. The first is simple multiplication to give you rough round figures, These are as follows (We will use the cost of the dish above to show the results)
[Dish cost] x 2 = 50.00% GP / £4.20
[Dish cost] x 3 = 66.66% GP / £6.30
[Dish cost] x 4 = 75.00% GP / £8.40
[Dish cost] x 5 = 80.00% GP / £10.50
[Dish cost] x 6 = 83.33% GP / £12.60
[Dish cost] x 7 = 85.71% GP / £14.70
[Dish cost] x 8 = 87.50% GP / £16.80
[Dish cost] x 9 = 88.88% GP / £18.90
[Dish cost] x 10 = 90.00% GP / £21.00
[Dish cost] x 15 = 93.33% GP / £31.50
[Dish cost] x 20 = 95.00% GP / £42.00
[Dish cost] x 100 = 99.00% GP / £210.00
[Dish cost] x 200 = 99.50% GP / £420.00
The Second way: Exact GP figures.
The simple calculation is to identify what GP you want, so lets say you want exactly 82% GP on your dishes.
You take the number 82 and put a "0." in front of it like so "0.82"
Then subtract the "0.82" from the number 1. This equals 0.18
[ 1 - 0.82 = 0.18 ]
Next take your food cost (so our lasagna dish is £2.10) and divide it by 0.18
[ £2.10 / 0.18 = £11.66 ]
£11.66 is a GP of 82% from a food cost of £2.10
Below I've already provided you with a list of calculating numbers you can use to divide against your food costs to find out the different GP prices.
Dish cost / 0.35 = 65% GP
Dish cost / 0.25 = 75% GP
Dish cost / 0.2 = 80% GP
Dish Cost / 0.15 = 85% GP
Dish cost / 0.1 = 90% GP
Dish Cost / 0.01 = 99% GP
Quote" You may notice by using the second way that trying to get a GP of 99% seems impossible because of how expensive the dish would need to be priced to achieve that margin.
It is impossible to achieve a GP over 100% because in order to do that you would need to divide by 0 which any calculator will say is invalid/Error. The only way to achieve a GP of exactly 100% is by the food costing the business nothing (and even then, salt, pepper, oil and the things we don't think about will never truly give you 100%)
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