Food Cost Basics
Under normal conditions, a food service establishment needs to keep average food cost under 34% of revenue in order to make a healthy profit. That being said, a retail store that sells bottled juice can achieve a lower food cost, and should strive for 20% – 25% average food cost for organic juice.
This means that if the juice is selling for $10.00 / bottle, the cost of the actual produce that goes into the juice should cost no more than $2.50, on average.
Keep in mind that the actual food can vary quite a bit between recipes, as long as the average food cost stays under the 20%-25%.
Here is an easy guide to estimate food costs, without actually making any juice.
Step #1: Determine how much of each ingredient, in weight, goes into the recipe.
Hint: The Goodnature X-1 takes between 20-30 lbs of produce per juicing cycle, so the total weight of the recipe should be 20-30 lbs (9-13 kg).
Step #2: Get current pricing of the produce from your local distributor. If you do not yet have a distributor, you can use the prices at the grocery store, but keep in mind that those prices will be much higher.
If your distributor or grocery store doesn’t have some items sold by weight, e.g. a “bunch of kale,” you need to weigh the item to determine the weight.
Step #3: Calculate the total cost of the recipe by adding the cost of each ingredient.
In general, each pound of produce makes about 10 oz. of juice, so for a 16 Oz / 500 ml of juice, you need about 1.6 lbs / .73 kg of produce.
So use the following formula to achieve an estimated food cost for each bottle of juice:
FC per Bottle = Total Cost / Total Weight in lbs * 1.6
FC per Bottle = Total Cost / Total Weight in kg * .73
My make believe recipe uses:
15 lb apples
5 lb celery
3 lb kale
2 lb lemon
1 lb ginger
Total Recipe Weight: 26 lbs
My local organic prices are (I’m just making these up):
Apples : $1.50 / lb
Celery: $1.25 / lb
Kale: $3.00 / lb
Lemon: $1.00 / lb
Ginger: $2.00 / lb
15 * $1.50 + 5 * 1.25 + 3 * $3.00 + 2 * $1.00 + 1 * $2.00
Total recipe cost: $41.75
FC Per Bottle = Total Amount / Total Weight in lbs * 1.6
FC Per Bottle = $41.75 / 26 * 1.6
FC Per Bottle = $2.57
If we already know we are charging $10 per bottle, then we can do the following calculation:
Cost / Price = FC%
$2.57 / $10.00 = 25.7%
We could also work backwards, and determine the minimum price we can sell the juice for, going on our target food cost.
If we were going to stick to the 25% target food cost, we could do the calculation to determine the minimum price:
Cost / 25% = Minimum price per bottle
$2.57 / .25 = $10.28
So now we know that the juice has to sell for at least $10.28 to achieve a 25% or lower food cost.
Please note that these numbers and formulas are estimates, and to achieve exact figures you will have to actually make the juice.