In the mobile food industry, the term “COGS” stands for cost of goods sold. The term describes the amount of money a food truck spends on supplies and food ingredients – such as beverages, seasonings, meats, fruits and vegetables – used to prepare the menu items they sell. Your food truck COGS should ideally account for no more than 35 percent of your sales.
5 Steps To Cut Your Food Truck COGS
By following the following steps you will be able to cut your expenses and waste which in turn will increase your profits.
Categorize your food expenses
It’s easier to control your food truck COGS when you keep track of how much is spent on each group. For instance, if you allow 11 percent for meats, 10 percent for produce, 6 percent for dairy, 5 percent for baked goods and 3 percent for beverages, you’ll stay within the suggested COGS of 35 percent. Break down your food items into groups and set guidelines that govern how much to spend in each category.
Comparison shop to find better pricing
Though most food truck owners prefer to maintain solid, ongoing relationships with food suppliers and distributors, it’s a good policy to stay informed of cost-effective alternatives. Continuously be on the lookout for more economical suppliers and order from those who offer the best deals. Ensure that bargain pricing does not sacrifice quality products.
Measure all ingredients in food-preparation procedures
Food truck owners are at risk of losing considerable amounts of profit when food-prep staff members don’t properly measure ingredients. For instance, if you or your staff continually uses a full cup of butter for a recipe that only requires 3/4 of a cup, your cost of butter will quickly rise by 25 percent. Enforce strict measurement guidelines for your recipes.
Adjust your menu or prices accordingly when using seasonal ingredients
Certain fruits and vegetables increase and decrease in price according to season. Limit the sales of seasonal items to periods when they are plentiful and acquired at minimal price. If you continue to sell such goods during off-season periods, adjust your menu pricing to offset the extra cost.
Design specials that reduce waste and use slow-moving stock
Meal specials are typically offered for a limited time at a bargain price to entice customers to buy them. Make use of soon-to-expire foods by including them in specials. For instance, if your sliced breads are about to become stale and your cheese is about to expire, create a grilled-cheese special.
The Bottom Line
One of the best things that a food truck owner can do is keep proper recordings of their business operations. This is even more important when it comes to sales. Beyond sales, keeping record of the cost of goods sold is very important. This step that will help you better manage your overall food truck operations and determine whether the business is running profitably.
Do your food truck COGS equate to more than 35% of your sales? We’re interested in the industry average. You can share your food truck COGS with us privately via email, or publicly through Facebook or Twitter.