Food Truck Start Up: Calculating Food Cost

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Determining and monitoring your inventory level is crucial to save yourself from theft and loss of profits. it’s also key to making sure you’re stocked with the appropriate amount of inventory. The easiest way to determine whether you are or not is to calculate the “number of days” of inventory. This number shows you how many days your existing inventory should last, according to how much food you’re going through in an average day. Here’s a look at a simple way to calculate this, courtesy of One Fat Frog Restaurant Equipment:

There are two simple steps to calculation:

1. Calculate the average daily food cost like so: Average daily food cost = food cost divided by number of days in period. — — so, if your food cost for a 30-day period is $15,000, then divide that by 30. This gives you $500 = your daily food cost.

2. Then, calculate the number of days of inventory like so: Number of days of inventory = ending food inventory divided by your average daily food cost — — so, take your ending food inventory (say, $5,000) and divide that by your daily average food cost ($500). This means you have 10 days worth of food available. Or, 10 days worth of inventory.

Simple. This calculation has told you that at the end of a 30-day period, you had around 10 days worth of food on hand. For an average food truck, this is a serious excess of inventory.

Typically, food truck owners optimize food inventory at about three to five days of food at one time. The ideal situation would be to have less than a week’s worth of produce and fresh products, So, the entire inventory of a food truck should turn over every week or so.

Lowering your inventory levels to the three to five day range will decrease your food costs pretty much immediately. But be wary not to reduce your inventory levels to the point where you’re always running out of food and having to turn away customers. Just reduce or eliminate the excess inventory and you should be cruising along nicely.

One Fat Frog Restaurant Equipment

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