How to Calculate Gross Profit in Food Service
In the food service industry, you calculate gross profit by deducting the cost of goods sold (COGS) from the total sales for the accounting period. You need to work with direct costs, an example of which is how much the food cost to purchase, while an indirect cost would be the cost of paying a waiter to serve the food. Keeping the distinction between direct and indirect costs intact will help the small-business owner keep an accurate profit-and-loss statement.
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Instructions
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Determine the accounting period -- weekly or monthly. Next determine the direct costs, which can be directly traced to purchasing the food. Another way to determine the direct cost of food is testing the cost to determine if it can be counted as inventory. If it cannot, it's likely the cost is not direct.
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Calculate the COGS for the accounting period by determining the amount of beginning inventory then add any purchases made during the period, then deduct the amount of remaining inventory for the end of the period. For example, a restaurant has $8,000 in beginning inventory for the week. It purchases $4,000 worth of food during the week. It ends the week with $7,500 in inventory. So, $8,000 plus $4000 minus $7,500 equals $4,500 in cost of goods sold.
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Deduct the COGS from the total amount of sales for the accounting period to get the gross profit. Continuing the example, the restaurant has $13,500 in sales for the week. Deducting $4,500 in COGS from the $13,500 in sales equals $9,000 in gross profit.
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