Why it's important
Including labor in recipe costing is crucial because it accounts for the time and effort required to prepare a dish. Labor costs can significantly impact the overall profitability of a menu item. By factoring in labor, you get a more accurate understanding of the true cost of producing a dish, helping you to:
- Set appropriate menu prices to ensure profitability.
- Identify inefficiencies in the preparation process.
- Compare costs across recipes to make informed decisions about what to offer.
Ignoring labor costs can lead to underpriced dishes, reduced profit margins, or even financial losses. It's all about ensuring you capture the full picture of what it takes to bring a recipe to life!
How to use it
Add that labor charge as an inventory item:
For example, a Bakery Manager:
1) Created a vendor called In House
2) Enter the time in the Packaging section.
3) Enter the hourly wage in the As Purchased Price. (See the fields below for correct entry).
reciProfity can convert hours to minutes. So, if you use this labor in a recipe by minutes, we know how many minutes are in an hour. No problem.
Entering Labor into a Recipe
In the recipe ingredients, enter the number of minutes or hours for that labor type. reciProfity calculates the cost and adds it to the recipe's total cost.