Coffee shop operation | do you know how to calculate your material cost?

If you are still struggling with how to improve your operating profits, or are still worried about how to maximize profits, then you try to control your material costs, which may give you unexpected gains.

The so-called material cost mainly refers to the sum of the cost of materials that can produce benefits in the business process, such as the raw material cost of food and beverage production, the direct retail cost of goods, the cost of all kinds of packaging, and the cost of all kinds of cleaning products used in the store. If your monthly sales income is about 30000 yuan, and about 10000 yuan is spent on the material cost that generates this part of the income, then your material cost rate is 33.3% (10000 / 30000). In the coffee industry, the material cost rate should generally be controlled between 30% and 35%. If your cost is higher than this ratio, say 40% Murray 45%, then it will be very difficult for your business to be profitable. Generally speaking, the 1Gram3 of your turnover is your material cost, and the remaining 1Action3 is your labor cost, and the remaining part of your turnover is your profit after paying various expenses (such as rent, insurance, equipment maintenance, equipment depreciation, etc.).

If you want to accurately calculate the cost of your materials, you need to know a few things first. First of all, you need to know your net material cost or idealized material cost over a certain period of time (usually in monthly terms). Second, you need to be able to calculate your real material cost during this period. Only after you really know your net material cost and the real material cost, can you know whether there is a material cost control problem in your business process by comparison. Your goal should be to make your real material cost as close as possible to the ideal material cost, of course, you can never achieve the two values are exactly the same. If you do, then your business is perfect and no one can surpass, that is to say, there are no minor mistakes, no loss or waste in the business process. Trust me, it's completely impossible.

Usually, the difference between the real material cost rate and the net cost rate is between 1% and 1.5%, which is within an acceptable range. If the turnover is 30000 yuan, if the deviation is 1.5%, it means that the cost of 300-450 yuan is caused by error, loss or waste, which is equivalent to wasting about 10-15 yuan a day. Just looking at the numbers, this seems like a lot of money, but if you consider some accidental operational mistakes every day, or just some coffee powder spilled while making coffee every day, and some snacks that are out of date, you have no choice but to sell it at half price or simply let your employees eat it, or just throw it away, then 10 yuan is not a big sum. But if the difference between your actual material cost and your net material cost is about 3%, or even 4% or 5%, then you need to pay attention, because if the monthly cost loss reaches 1500 yuan, that is, nearly 50 yuan a day, this means that you may have some serious mistakes in your business, which you must correct or correct.

To calculate the exact cost of materials, you first need to calculate the exact materials and costs of each product you sell. For those items that you buy directly and only retail, such as various coffee utensils, ready-made cakes, bottled drinks, etc., these are easier to calculate. For those items that you only buy raw materials and need to be further processed, it is more cumbersome to calculate. For example, if we want to calculate the raw material cost of a 12-ounce cappuccino, the calculation process is as follows:

The material cost of a 12-ounce latte

Double espresso

(9 yuan / pound / 56-8 cup espresso = 0.1607 yuan / serving espresso x double portion = 0.3214 pieces of 2-ounce espresso per serving-0.32 yuan

Milk

3.25 yuan per gallon / 128 ounces per cup of coffee = 0.025 yuan / ounce x 6.6. Ounce = 0.165 yuan-0.17 yuan

Other excipients (sugar packets)-0.02 yuan

Total raw materials-0.51 yuan

You might ask, why do I need only 6.6 ounces of milk to make a 12-ounce latte? If we are using a 12-ounce cup, we first need to have about 2 ounces of coffee, and then there is about 10 ounces of space left to fill. So do I need 10 ounces of milk? The answer must be no. When you steam the milk, the volume of the milk expands rapidly as it is inflated. Usually milk increases by about 50% when it comes to making lattes and expands by about 80% if cappuccinos are made. So usually when deciding how much milk we need, we need to consider how much space is left in the cup, and then divide it by 1.5 if we make a latte and 1.8 if we make a cappuccino. So, in our example above, if we need to fill 10 ounces of space, we need to divide 10 by 1.5, so we get a value of about 6.6 ounces.

As long as you calculate the net material cost of the product you sell, you can calculate your monthly net material cost. You just need to multiply the sales volume by the corresponding net material cost, and then add it up. Now you have monthly net material costs, and if there are no mistakes and waste in your operations and operations, these materials will eventually form your sales. If you divide this net cost by your monthly sales income and the percentage is higher than 35%, the price of the product is too low and needs to be raised.

Now that you know the net cost of materials, you need to calculate the actual cost of materials in your actual business process. To calculate the actual cost of materials, you need to calculate the amount of supplies consumed in a month, which includes all the food you sell directly, raw materials, various paper cups, other consumables (including paper cup covers, napkins, paper trays, plastic bags, etc.), as well as all kinds of cleaning products, such as hand sanitizer, cleaning agent, coffee maker cleaning powder, etc. If your store also sells travel mugs, gadgets, music CD, T-shirts, etc., the cost of these items is also included. If some items are only partially used, then the proportion used can be calculated.

Make a list of all the items used and classify them, beverage category, food category, and so on, supplies, paper cups, and so on. In this way, you can see not only the sum of the actual cost, but also the itemized cost of all kinds of items. If there is a problem with your total cost, then you can find out at a glance which part of the problem.

You multiply the number of different items by their unit prices, and then add them up, and you can easily get the total actual cost of the items consumed in your store.

To control the amount of supplies in the current month, you first need to keep a detailed record of all your new purchases this month. In order to keep a better record, you can set up a ledger and include the corresponding purchases in different columns. In this way, you can not only record the total amount of goods purchased, but also know at a glance the amount of different materials you buy. At the end of the month, you only need to add up the contents of different columns to get the total amount of new items purchased this month.

With the details of the list and the details of the current month's purchase list, you can easily calculate your actual material cost consumption for the current month, and then divided by your sales, you will get your monthly material cost rate. The formula is as follows: Beginning Inventory + Purchases-Ending Inventory= GOG ($) / Sales = COG% previous period balance + current purchase volume-final balance = material cost / sales = material cost rate.

By classifying, you will be very clear about the amount of each item, and then divide the used materials by the sales directly generated by these materials, and you will get the proportion of the cost of each item to the sales. if you add up all project costs and divide by sales, you will get your material cost rate for this month. Of all the items, the only materials that do not directly affect sales should be all kinds of cleaning materials.

By comparing the ideal material cost with the actual material cost, and then through the detailed list of materials, you can easily see the problems in your business process, and then you can make targeted corrections and adjustments.