Useful Advices - Business

Most culinary schools today are still teaching their students how to compute the wrong food cost. Granted the math is right, but the dollars involved are hurting the bottom line of our restaurant

According to USFDA, a combination product is one composed of any combination of a drug and device; biological product and device; drug and biological product

s. The problem arises from the separation of percentage points and dollars.

Banks Use Dollars, not Percentage Points
One thing I am quite sure of is that banks do not accept perc

; or drug, device, and biological product and fixed dose combination would include two or more combinations of drug.

Examples of combination products may in

ntage points as deposits, believe me I’ve tried! For some reason the teller just looked at me dumbfounded then just started chuckling. Matter of fact she had so much fun with it she showed the te

lude drug-coated devices, drugs packaged with delivery devices in medical kits, and drugs and devices packaged separately but intended to be used together.

ler next to her who responded in much the same manor. I didn’t find the humor in it since I had bills to pay, product to buy, and employees wanting their cash too. To rectify the situation I cowe

here is enormous increase in the number of combination products entering the market in the recent years. Combination products have proven advantages but fixe

ed to the pressure and made out a revised deposit slip using their required dollar standard.

So if you can’t deposit percentage points why do most restaurants use this as their key focus goa

d dose combinations are still in the process of convincing regulatory authority on their advantages over the single ingredient formulations.

Combination pro

? Shouldn’t the establishments focus on dollars instead? Your darn right they should.

A Higher Food Cost Doesn’t Mean Theft or Waste
It’s the end of your period and the accounta

ucts have become life saving products for the pharmaceutical companies who doesn’t have many innovative molecules in their product pipeline and have been inc

t just brought in the p&l. A quick scan shows your food cost is 35%. What! The first thought that runs through most operators and managers minds is we have a theft or product waste problem

easingly used in the product life cycle management. Even the companies having product patents are trying to extend their product life cycle through the combi

. Well, that may be true, but before you go running to the staff and start ranting and raging you have to find out if that is the truth. You may very well have to eat those words after you get th

nation products and maximize the revenues. But the companies involved in this practice are overlooking that they are burdening the patients both economically

ough this article. Matter of fact they may need to be praised instead.

What Is Ideal Food Cost Then?
Well let’s take a look at what the real food cost value is and how it is divi

and physically. They need to rightly judge the benefits of the combination products and they have to even look at the risks involved when combining the produ

ed. To compute real food cost you take the cost of the product you needed to produce the food and divide it by the sales revenue of that food. You can compute the food cost for an individual plat

ts. Some of the combination products were well accepted by physicians while others suffered. Companies involved in development of combination products are fi

, or over a specific period of time. For example if it costs you $3.50 for the product and you sell the item for $12.00 your food cost is $3.50/$12.00=0.2916 or 29.16%

29% Food Cost, That

ding difficulty in defining their combination products and facing various challenges from selecting a combination to marketing it.

Following aspects would a

s Great
Yes, 29% food cost isn’t bad, but is it the best thing for the restaurant? Let’s take a look at sample full service restaurant. Looking at a few of their menu selections we have

dd to the challenges in developing combination products:

Which markets to tap where the combination products can do fairly well?
Which combination prod

chicken dish which is on the menu for $15.00, steak for $19.00 and a steak and lobster dish for $28.00. When we look at the cost side the chicken is $4.00, the steak $7.00 and the steak and lobs

cts are meaningful and rational?
Which therapeutic categories to select?
Which Combinations can address unmet needs of the patients?
Do combin

er $12.00. We do our food costs on these to come up with the chicken dish running a 27%, the steak 37% and the steak and lobster a 43% food cost.

It’s pretty clear, if you want to run below

tions increase the patient compliance?
What would be the developing cost?
How to tackle the risks encountered during combination product developmen

that magical 30% food cost number, ell chicken! But, as I said when we started the bank doesn’t like percentages on the deposit slips, so convert them to dollars. Okay, since they sold a chicken

t?

As combination products don't fit into the traditional categories of drugs, medical devices, or biological products, the USFDA is in the process of devel

dish for $15.00 and it cost them $4.00 that’s easy, $15.00 - $4.00 = $11.00. Are they happy now? They have their 27% food cost, and banked $11.00. All great until someone tells them of their erro

ping new procedures for reviewing their safety, efficacy and quality.

Professional from academic institutions, pharmaceutical industries, health care indust

. Sure they ran a nice food cost, but they could have banked more money. How? By selling either of the other dishes. The steak, which cost them $7.00 to produce and sold for $19.00 would have ban

y and representatives from various regulatory agencies are working out to design the regulatory requirements for manufacture and sale of combination products

ed them $12.00 and the steak and lobster would have brought in a whopping $16.00.

If it were me going to the bank to make the deposit I would much rather be depositing $16.00 for the steak a

.

As there is an increasing trend of the combination products companies manufacturing such products should be able to tackle the problems involved in the de

d lobster verses the $11.00 for the chicken and would take the associated 43% food cost with a smile. So, next time your actual food cost numbers come in run your ideal food cost numbers to compa

elopment. They need to be wiser in analyzing the market trends and the regulatory requirements.

Companies that provide selfless information through particip

e before you fly off the handle with your staff. The difference between your real and actual food costs is where any associated problems can be found with respect to theft or product waste issues

tion in industry events and feedback to regulatory authorities would be able to face the challenges and will be successful in developing combination products

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Useful Advices - Ideal or Real Food Cost in the Restaurant Business

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