The Importance of Calculating Recipe Costs for Your Bakery

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calculating recipe costs for your bakery

When running a successful bakery, you must be mindful of how much it costs to make your pastries. Each pastry, cookie, muffin, and cupcake, for example, are created in a distinct fashion, which means they may be priced differently. To know how much to charge for your baked goods, you may need to track how many ingredients are required to determine the recipe cost.

What is Recipe Costing?

Collecting data on the price of each ingredient in a baked good is the first step in assessing the cost of a recipe. Calculating the cost of recipes works best if you have consistent, precise inventory management and accurate vendor prices. Be conscious of the expensive and inexpensive ingredients required for your baked products when buying at the supermarket. For example, if you use cheese in a pastry, stocking up on it will be costly, and customers will pay a little more for a cheese-filled pastry than they would for one without.
When it comes to common bakery ingredients, make sure you write down how much each baked good requires. If most of your pastries contain butter, make sure you have plenty on hand to prepare your baked goods, but just use a small quantity of the butter in each pastry to price it out. For example, when writing down the recipe, record the prices for any ingredient purchased in bulk. If you require 8 ounces of cream cheese for a baked good and it costs $0.79, but you only use 2 ounces, divide the cost by the amount you are using, which ends up being $0.79 ÷ 4 = $0.20. This method can help you in the long run by figuring out how much of an ingredient is used to determine the cost of the product.

Why is it Important?

Determining your bakery baked goods costs is essential for several reasons. For starters, it allows business owners to know how much money they are investing and how much profit they are reaping from individual food dishes. So if one pastry is not bringing in enough revenue, the restaurant owner can adjust the cost or the menu price. While altering the price is essential, it’s also crucial to avoid food waste when making pastries. Know which dishes are popular or not to ensure you have enough of the essential key baking products to make those certain dishes. If the item is expensive and customers aren’t buying the product, use those baking products in another dish.

How To Determine the Cost of Recipes

To calculate the cost, you must know all the ingredients within that recipe. Once you have a list, you can start calculating the cost of each component. You’ll want to determine how much of the component is used in the product. These calculations can be done by hand, using a recipe cost calculator, or using costing software. Calculating your bakery recipe cost is much simpler if you have an advanced payment system. The National Retail Solutions (NRS) Point of Sale (POS) system is a great option. The inventory management software on the NRS POS lets owners know how much stock they have and tracks how much of a specific ingredient they use over time. Overall, having an NRS POS allows owners to make informed judgments about recipe costs and easily calculate the price. To learn more about the NRS POS, visit nrsplus.com/pos.

How to Keep Costs Low

There are many ways to keep bakery product production costs low. To start, make changes to the pastries that use expensive ingredients and find an alternative component. Another way to keep costs down is to look into your vendors to ensure you get the best product prices. So you can get the most bang for your buck, compare pricing for each of the products you wish to buy. You do not want to spend an incredible amount of money on products and will, of course, increase the price of your baked goods, ultimately turning away many customers. Lastly, ensure to monitor and adjust the quantities of your dishes. If you notice customers are not finishing a specific dish, you may want to change the recipe and produce a smaller serving size. This will save money on ingredients and reduce food waste.

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Don’t fall behind by missing out on all that modern POS systems can do for your small business. Contact NRS today at (833)-289-2767 or [email protected] to learn more about how modern ingenuity and resources can help you maximize profits.