A point-of-sale (POS) system is more than just a way to ring up customers. A POS can effectively integrate with other key business processes, make operations more efficient and act as the backbone of your business. A POS can bring all aspects of your business together with its integration features.  

Customers, employees, and your bottom line will benefit from a technology platform that provides real-time business data, decision-making insights, customer relationship management, and improved efficiency. Take your customer experience and business process to the next level with the integration potential of a POS system.  

What is a POS System?

POS is short for Point-of-Sale. This is a system and software designed to allow your business to accept quick digital and cash payments at the time of check out, track additional profits, provide actionable insight into data within all business areas, and much more.  

A digital POS system takes a traditional cash register to the next level. Beyond simply logging a transaction, a digital POS software uses your sales information to do more. It can analyze the profitability of an item, adjust inventory ordering based on actual sales volume, track products as they enter and leave your business, manage staff schedules, and develop business-enhancing programs centered around your loyal customers.  

Capabilities of a POS System:

• Customer loyalty programs 
• Marketing campaigns 
• Data insights 
• Inventory tracking and management  
• Track labor and productivity 
• Expedited cash and card check out  
• Much more 

POS Business Integrations 

Integrating business processes into one cohesive system allows business owners to make significant strides in their business understanding, progress, and revenue capabilities. Owners can use this more robust business picture to cut costs, improve labor, and develop business practices.  

Marketing Integration

An innovative and effective marketing strategy requires a deep understanding of the customer profiles that your business serves. A system that integrates data from all aspects of a business with marketing capabilities can help a business owner take their marketing campaigns in the right direction.  

One of the primary ways a POS system can meld together data and marketing comes with inventory sales tracking. This feature helps business owners understand what products encourage repeat business from their customers and what products could use an additional spotlight to grow sales.  

Perhaps most importantly, digital payment methods and customer tracking allow business owners to implement customer loyalty programs. For example, loyalty programs might include promotions, points that customers can accumulate toward discounts or free items, and coupons for returning customers. These efforts help to turn first-time guests into loyal, repeat customers who will share their experiences at a business with others.  

Storefront Integration

Whether you have multiple locations or an e-commerce platform, integration of all business storefronts can be integral to gaining a full scope and view of a business. Instead of gathering sales transactions and inventory information from multiple locations, a POS software system seamlessly collects data on all forms of payment. In addition, it collects business analytics, sales reporting, labor time clocks, and marketing efforts into a cohesive report for business owners to easily interpret.  

This automatic intake and analysis of data across physical and online stores open the door for business owners to begin understanding how sales locations interact with one another. With these reports and insights, business owners save time and make more informed decisions that benefit all facets of their business.  

Payments and Accounting Integration

From labor costs to effective inventory management, there are many ways an integrated POS system can identify and widen profit margins for small businesses. Information that allows for precise alterations within a business can impact productivity and the effective use of resources.  

When payment transactions are coupled with the speed of services and labor costs are associated with time-of-day transaction data, business owners can begin to make data-driven decisions on how best to use their resources. They can better understand what times of day they have the highest sales volume and what times they have slower sales to schedule labor and costs efficiently. Additionally, with documented, accurate items sales, management can precisely order inventory and avoid wasteful spending.  

Beyond decision-making insights, a POS system’s ability to integrate sales transactions and labor time clocks with accounting information allows a business to keep accurate financial records. Intricate knowledge of payments made and credits received can help business owners see where to cut costs and reallocate resources to achieve optimal revenue.  

Integration Efficiency

The ways a POS system can integrate within business operations are endless. Each of these integrations has its benefits and insights to give business owners a deeper view of their business operations and make informed decisions. POS system integrations also have significant impacts on a business’s overall efficiency and productivity.  

In a traditional system, employees and owners are forced to manually complete tasks, taking up time and exposing processes to human error. With an integrated POS system, data is gathered on all aspects of the business, time clocks are recorded, inventory is ordered, and sales transactions are automatically collected without spending additional time and manpower. Business owners and employees can instead focus their attention on daily operations and utilize the insights of an integrated POS system to save time, energy, and resources.  

Bring all aspects of a business together with the integration capabilities of a POS system platform for your business.   

BNG Point-of-Sale

BNG Point-of-Sale has solutions to improve your bottom line. With a full selection of POS systems for various businesses, you’ll find the right tool to grow your business with the personalized support you need. Connect with us  to learn more.

How To Increase Food Delivery Sales 

Food and restaurant delivery sales are of critical importance now in the restaurant business industry. To cut costs in the face of the coronavirus pandemic (COVID-19 pandemic), many restaurant owners have used the internet to boost their in-house and delivery sales, and consequently their revenue stream. As the colder months arrive, with the deployment of additional restraints on outdoor dining finished, numerous restaurants are intensely exploring ways to handle online food orders and delivery service and drive food delivery sales. 

You will improve your restaurant's revenue, sales, and profit margins if you give current and potential customers the option of ordering their food online and having them delivered. In the restaurant industry, the rise of internet-based food ordering and delivery platforms has changed the way traditional restaurants operate completely. 

Online ordering services like Door Dash and Uber Eats can give restaurants an extra boost in revenue. Furthermore, the launch of a new era of cashless economies, which has facilitated the rising popularity of cloud kitchens, a concept that offers food delivery and pick-up services, has brought about significant growth in digital food ordering. 

Some of the ways you can increase your food delivery sales include: 

Create An Online Presence 

For an effective response to consumer demand and convenience to customers, ensure your business is easy to find online. Search engine optimization begins with your website, specifically with your web optimization (SEO). Your website will not be found by search engines if it is not SEO-friendly. Begin with a good base of knowledge: look to Google's SEO guide. Some online website builders allow you to build a website for your restaurant in a matter of minutes. 

After you get your website on Google, integrate it with food delivery applications. Though fees apply to transactions, it is a good service for increasing your brand's visibility and getting your message out to new audiences. Alternatively, you can take and process orders using integrated systems to handle pickup and delivery. 

Finally, you must improve your social media profile. There is a lot of interest in Facebook and Instagram, but it is important to understand the differences in how they are used. In addition to sharing updates and deals, Facebook makes it easy to communicate with customers. Using Instagram to distribute images and stories will attract attention and will stimulate customers' appetites. 

Improve Your Marketing Efforts 

Advertising is the secret to growth for countless businesses. With the right approach, you can get a massive return on investment and increase food delivery sales in your area.  

According to expert reports, there is a clear correlation between advertising spending and growth. Companies that spent around 16.5 percent of revenue on advertising grew between 1 to 15 percent, while companies that spent 50.2 percent of revenue grew between 31 to 100 percent. Consider the following tips: 

• Social media ads: which include platforms like Facebook and Instagram are fantastic tools for raising awareness about your delivery service. You can personalize your campaigns by filtering users based on age, interests, habits, and other important criteria. 

• Restaurant searches: People use Google to search for places to eat and see organic and paid search results. Use search engine ads to be visible and get people to visit your website. 
• In-app ads: Some food delivery apps let you pay to promote your business. Like social media ads, these promotions can be targeted toward specific areas.  

Create Promotions 

Food delivery apps and other ordering services make it easy to get food, and it should not be surprising that convenience comes at a cost. When it comes to making a purchasing decision, buyers will have to weigh their options by seeing which product has the best value for their money. 

When you offer lower prices on certain products, you are raising awareness of your business and will increase sales because you are drawing in customers who may not have purchased at full price. When giving customers bargains on their orders, you will inevitably decrease your profits. However, this is a chance to develop customer loyalty, so it will be worth it. Customers will be able to see that your food is delicious and popular. That is the message you should convey now.  

Along with discounts, you could offer items or a free side with every meal. Customers love to realize they are getting a better deal because you are including free items with their purchase. 

Use High-quality Descriptions And Images 

You will want to include as many images as possible in your digital menu. This is vastly different from a paper menu at a restaurant. You need to communicate your food's flavor to your customers because the customers cannot detect the smells coming from the kitchen. The pictures and use of descriptive language will get your customers excited and ready to eat. 

We must describe every meal to our audience accurately, and all of this must be done at the same time. For online customers, since they cannot ask questions, you must ensure you are clear on everything that comes with the order. This includes dishes, condiments, and other commonly included extras. 

Receive And Address Feedback 

Positive feedback from the customer base is vital for every business. The biggest worry of your customers is that you will put out low-quality food that is unsafe to eat. They want to know that they are getting excellent value. One negative comment about your food can cause major problems. You can receive customer feedback by simply requesting them. 

Include a small thank you card with each order. Also, ask for feedback on each of the cards. Customer feedback should be appreciated, so take notes while allowing customers to be honest. 

In addition to demonstrating that you run a high-quality restaurant, positive feedback sends a signal to customers and search engines alike that people are eager to find out more about you. Having a greater number of social signals and reviews results in the greater likelihood of your rankings increasing on search engine results pages. 

Incentivize Rewards 

Another crucial way of retaining customers and claiming a good market share is to reward loyalty. 

Creating a restaurant loyalty program allows you to demonstrate to customers how much you value them. In addition, these rewards help encourage customers to buy more, building a continuous revenue stream. Repeat customers spend more money than new shoppers, so it is beneficial to keep these consumers around. Likewise, retaining current customers is 5 times cheaper than finding new ones. Some of the ideas you can implement include: 

• Tracking shopping habits: Each time a guest buys from you, their order is logged so you can see what they buy and how often. 
• Accruing points or levels: Each dollar spent helps the buyer earn redeemable points or unlock tiers that provide special benefits. 
• Receiving discounts and free items: Either through redemption or targeted offers, loyalty members can get a percentage off their order and free meals, add-on items, and delivery.  

Speed Up Your Service 

Fast delivery is critical. You need to deliver high-quality service to keep customers coming back for repeat business. That way, you will be able to enjoy sales increases from a more loyal customer base. When it comes to delivery, there is nothing more important than speed. 

The work starts with the basics: order processing. When you order something from your site, app, or over the phone, it should arrive in the kitchen with minimal delay. This process is often further delayed by outdated restaurant equipment, which usually wastes a lot of money. On a busier day, servers will need to print a receipt and hand it to the kitchen, and it will take additional time. 

Even better, new point of sale systems now makes these steps easier. Orders can be pushed directly to your kitchen's display. Back of house staff finish orders faster, with less time spent on them. 

While you cannot just tell your drivers and bike riders to ride faster, you can tell them fewer things to do so that you will have record-setting delivery times. When carrying out this strategy, make sure to add more delivery drivers so that each person delivers less frequently. 

Ensure Clear Communication 

Customers who want to place orders with your business can do so with ease thanks to phone-based services. However, this is often time-consuming. Errors are bound to happen, because of misunderstandings or conflicting information. Make sure your employees are professionally trained in effective telephone communication with customers. Make sure they confirm the order and are polite when doing so. And do not forget to include clear pricing options so customers can get their orders together without a hassle. 

Study Your Competitors To Learn Creative Food Delivery Marketing Ideas 

Learning how to improve your restaurant business cannot be done without other input. You should research the methods of your regional and national competitors to discover how they produce creative marketing strategies. 

If you keep up with the other restaurants, you will find some amazing deals available. There are many ideas here, but most of them do not apply to delivery. Make placing orders easy for your customers by including a link to your site. 

BNG Point-of-Sale are POS solutions that improve your bottom line. With a full selection of POS systems for bars, restaurants, and retail businesses, you'll find the right tool to grow your business with the personalized support you need. Connect with us HERE to learn more.

POS System Vs Cash Register: What's The Difference? 

A cash register, at its most basic level, is designed to record the transactions of sales that occur in a store.-for instance if they are happy with it or not! 

POS System Vs Cash Register 

For an effective approach to business, business flexibility, and meeting business goals, most restaurants and stores always search for ways to work faster and more productively. This is the reason business decisions for retail include deciding about the types of payments to use on an ongoing basis, remains particularly important. There have been many cases where traditional cash registers--even with their benefits--have been abandoned for the POS system. 

A simple cash register is a cash management machine that handles everything related to sales, changes, and money, for financial transactions. POS stands for point of sale, and it is a sale software suite that manages money, inventory, and business transactions. The major distinction between a cash register and a POS system is in terms of the convenience of use and in how well people can communicate with one another. 

Regardless of the business type, if a transaction is made at a retail shop (retail operation) or any other type of business, the POS system (which tracks and stores information about each transaction) uses real-time tracking and can keep track of everything purchased by the customer. A simple purchase like buying a purse can be recorded in detail by the POS register. Once information is captured, it is placed in a database accessible to company representatives to whom the information is pertinent.  

In this article, we discuss what a POS system and a cash register are, as well as highlight the differences between a POS system and a cash register. We also look at the reason many businesses and business managers are choosing the POS system. 

What Is A Cash Register? 

A cash register machine is a business machine with a basic cash management function. It usually has a compatible cash drawer, and indicates the amount of each sale, and records the amount of money received, for business operations. 

A cash register logs transactions that occur in your store, creating a record of the money coming in and going out during business operations. It can also calculate and add taxes, generate receipts, and offer basic sales tracking. 

What Is A POS System? 

POS (Point-Of-Sale) is defined as “of or relating to the place where an item is purchased.” POS systems were introduced in the 1970s, when cash registers evolved into computerized POS terminals that could perform additional functions, like credit card processing and advanced inventory control features. In recent times, many POS terminals integrate with other retail business tools, such as inventory management, accounting, or warehouse management software. Some are robust enough to act as a retail management command center that handles everything sales, inventory, and customer management. 

A POS may be comprised of a few components: 

• Touchscreen device 
• Card scanner 

• Chip reader 
• Barcode scanner 
• Computer 
• Server (the Cloud) 

Differences Between the Cash Register and POS System? 

On the outside, traditional cash registers and modern POS systems appear identical, as they appear to be tools designed to run sales. Distinctions between the two payment types are deeper than most realize. Cash registers can hold cash in a drawer and help you check out more efficiently. 

A POS system can also assist with running your retail business in addition to performing those functions. The primary difference between cash registers and POS systems is the advanced level of functionality and strength that the latter possesses. 

 Functionality 

Cash registers process cash sales and are equipped with a secure drawer for deposits and bills. Some cash registers can be customized based on your tax requirements, and others can also provide basic sales reports.  

POS systems, on the other hand, gives you access to all the functions of a cash register, as well as helping you: 

• Manage your inventory 
• Collect and store customer data 
• Run a loyalty program 
• Run reporting and analytics on your sales, inventory, customers, etc. 
• Create and implement promotions 

Integrations 

Most cash registers can only connect with your payment processor. On the other hand, with a POS system, you can further extend its capabilities by integrating with solutions such as: 

• Accounting software 
• Ecommerce platform 
• Loyalty and marketing automation software 

• Payment processor 
• Erp 
• Scheduling apps 

Portability and Flexibility 

Modern POS systems are better than traditional cash registers in terms of their portability and flexibility, no matter the business plan. If you are on the move, POS systems can run on many devices, including Mac, iPad, and PC, meaning that you have the option to have your checkout process as simple or complex as you would like. When it comes to sales, a POS system works no matter where you are: if you are working with cash or are mobile. 

Price 

If you are looking to save money on a register, traditional machines usually cost $100-$500 and may appeal to you as a result. POS systems' costs are significantly higher. For example, their yearly fees (around $1,000) plus hardware purchases (e.g., a computer or iPad) are expected. 

Regarding this, you should look at a point-of-sale system as an investment. Though it is pricier, the added benefits and advantages it provides could end up saving you considerable time, allowing you to expand your business in the process. A good POS has features that boost its productivity. You get more than you pay for when you maximize those capabilities. 

Payment Processing 

Most cash registers track cash and check sales along with credit cards if you add a credit card terminal. You can print receipts for customers, add and track sales taxes, and tally the day’s sales. Prices can be entered manually or programmed with specific department keys. However, cash registers do not have credit card processing capabilities. You will need to apply for a separate merchant account to accept card payments. 

Conversely, POS systems can accept cash and check payments. And unlike cash registers, POS systems typically have built-in credit and debit card payment processing. Having all your payment processing tied together in one system allows for more accurate sales reporting and helps prevent human error at checkout. 

Customer Support 

Cash register manufacturers usually offer phone support for any of their products, but it is typically limited to some troubleshooting and reports of defects. However, with a POS system, you will get more support from POS systems because they have support materials and staff or account executives to help with any questions you may have. 

POS systems typically have customer service agents available via phone, email, and sometimes live chat on the POS’s website. Many POS companies can offer users a dedicated representative. POS cash register systems also have community forums, whitepapers, and other guides available. 

Cash registers are usually pocket-friendly and can perform basic retail checkout and payment functions, and for some people, it could be the right solution. However, if you want to have key data and resources to grow your retail operation in a time-efficient manner, then a POS system is your best choice. 

BNG Point-of-Sale are POS solutions that improve your bottom line. With a full selection of POS systems for bars, restaurants, and retail businesses, you'll find the right tool to grow your business with the personalized support you need. Connect with us HERE to learn more.

How To Improve Restaurant Service and Win Back Customers 

Before entering a restaurant, most customers and restaurant guests already have certain assumptions and expectations in mind. Customers rely on restaurants for good service and great guest experience, which includes tasty food and the type of service attached to it. The Restaurant manager, owners, kitchen staff, and other employees all share the duty of the restaurant operations and providing excellent customer service. Good service and excellent dining experiences will help your customers get a positive impression and help keep them coming back. 

How To Improve Restaurant Service 

In this article, you will learn how to take your restaurant's service to the next level and deliver a truly unforgettable experience for your customers.  

Tips To Improve Your Restaurant Service 

The following are tips that will help you deliver a stellar restaurant service, have a positive impact on your customers, and ensure continuous customer experience improvement: 

Training Employees for Excellent Customer Service 

Excellent customer service is necessary for any restaurant, and any restaurant that fails to provide good customer service runs the risk of losing valued customers. Negative experiences at your restaurant will affect the bottom line, therefore it is essential to always work to improve restaurant customer service. The goal of training employees and other house staff is to make the customers happy. The owner and restaurant management are responsible for training staff members. Train your staff and inform them of your current customer service policy and be informed of how to handle constructive feedback from customers. 

• The food should be served and cleared from the diner’s left. However, the drinks should be poured and refilled from the right. Avoid bad service. 

• Whenever there is a need for any staff member to interrupt the customers, they should be polite. 
• Clear plates, bring the check, and process it promptly. 
• Encourage and train them to think about customer care, which goes beyond basic service. The care concept includes such simple steps as smiling at your customers and greeting them promptly and understanding their needs before them saying like refilling water glasses and keeping extra napkins. 

Deal With Customers Complaints and Concerns 

Everyone who has anything to do with restaurants knows the famous saying, “The customer is always right.” Any problem or issue in the aspect of customer care must be handled on a top priority basis, to avoid bad customer reviews. While some customers prefer to complain on social media platforms, as it is a digital world, it is crucial that the company's management team promptly respond to customer comments with kindness and respect when customers post complaints online. 

Remember to always: 

• Acknowledge customer complaints. Allow customers to freely air their complaints and give their words your full attention when they want to complain about your restaurant's service. 
• Respond Immediately to customer concerns. Giving employees the power to handle customer disputes is the best and most cost-effective solution for handling issues. First, say you are sorry to the customer, and then do everything you can to put the problem right. The key is to remain calm and try to keep the situation from getting worse. 
• Offer Freebies. Compensation is a wonderful apology. Even giving away a free dessert or a small appetizer will score you big points in the customer service department. Small ways to show appreciation for your customers will increase their positive thoughts about your establishment. 

Encourage Effective Communication Between Staff Members 

The key rule of exceptional service in any high-end establishment is that everyone is in constant communication. Managers should provide education on effective communications for their employees. To ensure all members of the staff are coordinated, regular meetings should be held. 

To guarantee speedy service to your customer base, there should be effective communication between the wait staff and the kitchen staff, ensuring that the food is delivered as soon as it is ready. Sharing responsibilities leads to better organization. Keep the position of ticketing and ordering together by having one person give the instructions. 

Your restaurant manager should approve of any work shifts that are switched by employees. Short staffing is caused by a lack of communication, so this will correct that problem. 

Ensure Accurate Wait Timings 

One of the significant turn-offs that lead to poor restaurant service is delays. Be it a delay in seating customers, offering the menu, taking the order, bringing in the food, or the bill; time lags can ruin the customer's experience. For excellent restaurant service, the wait timings should be accurate. 

• Inform customers about the wait time. If there are already people in line, and you think it will take about an hour to get the next group of customers seated, inform them of this. It is better to have shorter wait times for your customers, and if you do not, they will be disappointed. In advance, customers should be told about a time-consuming dish. 
• Keep them busy while waiting. As a customer service culture, most restaurants serve free bread and other goodies to their customers while they are waiting for their food. Why don't you put a TV in the waiting room, so that their wait does not bore them? Ensure that your waiting room is Wi-Fi-enabled. You can also keep customers entertained by putting table games in your restaurants. This also proves to be one of the most effective customer service techniques. 

Maintain Hygiene and Cleanliness in Your Restaurant 

Having a good reputation and cleanliness can ensure that you and your customers are safe and enhance customer loyalty while appearing trustworthy to your guests as well. If the customers receive their food on dirty plates, they will be upset. The issue of unhygienic bathrooms is a primary grievance of diners. Customers need to have a positive impression of a restaurant for your business to flourish. The FSSAI has developed protocols on cleanliness for restaurants, which all restaurants are expected to meet. Pay close attention to hygiene and cleanliness in your restaurant because your guests will judge your restaurant based on them.  

Use Technology for Better Restaurant Service 

The use of technology is increasing in all industries alike, and in this digital age and with so many new restaurants opening, the restaurant industry is getting competitive at each step. Automating restaurant operations helps in improving its efficiency which in turn will enhance your restaurant service. 

 Some of how technology can be used to improve your restaurant service quality include: 

Online Restaurant Reservations 

If you have a small dining space and your customers are reserving seats ahead of time, your restaurant is set for success. If the process of digital table reservations is done for the restaurants, their customer base will rise. Using a single interface, restaurants can view all their guest information, which allows them to reserve space for reservations. Waiting times are more accurate for walk-in customers and those who have previously made reservations. 

Customer Relationship Management  

CRM technology now helps restaurants to boost customer engagement through loyalty programs and other options. Restaurant CRM that is centralized lets you get important customer data that contains information like names, how often customers visit, preferences, and average spending. 

You can improve customer service by taking advantage of the captured data with POS (Point of Sale) integrated CRM, which provides knowledge of customer demands and behavior and lets you make informed decisions. Waiters can get insight into customer ordering history in the POS and can upsell to customers. 

Customer Feedback Management 

To become better at serving your customers, feedback is extremely important. You can improve your ability to gather and use feedback via the use of modern technology. Instead of the standard feedback form, you can utilize a feedback management app that makes more targeted requests for customer feedback on an order-by-order basis, tailored to the mood of the location and the quality of service. The report also assists you in knowing how your dishes are performing. Feedback app sends customer information to the CRM to streamline updates and to ensure all information is current. 

BNG Point-of-Sale are POS solutions that improve your bottom line. With a full selection of POS systems for bars, restaurants, and retail businesses, you'll find the right tool to grow your business with the personalized support you need. Connect with us HERE to learn more.

CoGS: Cost of Goods Sold Restaurant Industry Average 

The average cost of goods sold in the restaurant industry varies, but it sits around 30% to 35%. This is because CoGS are measured by inventory count rather than individual dishes or drinks. The more dishes served, for example, steak versus salad with no meat and side order fries instead of a baked potato means that everything gets averaged together into one figure - this makes calculating costs much easier! 

Cost Of Goods Sold Restaurant Industry Average 

CoGS is how much it costs you to produce a menu item. The cost of goods sold is also referred to as the “cost of sales.” One of the key components in the restaurant business is to control its cost of goods sold (CoGS). CoGS is especially important because it is related to your restaurant's profit margin for any period, revenue, and inventory management. Restaurants that do not control their CoGS and monitor it regularly may put the business at financial risk. 

Cost of goods sold (CoGS) includes all the costs and expenses related to the making of the menu item. CoGS exclude and do not include indirect costs such as overhead like rent, signage, maintenance, and marketing cost. Some of the items included in (CoGS) cost of goods sold are: 

• Cost of items intended for resale. 
• Cost of raw materials. 
• Cost of tools used to make a product. 
• Direct labor costs, like the back of the house (kitchen) staff. 
• Supplies used in either making or selling the product. 

• Overhead costs, like utilities for the manufacturing site. 
• Shipping or delivery goods costs. 
• Packaging and Container costs. 

Cost of goods sold (CoGS) ties directly into your menu engineering efforts, profit margin, revenue, and inventory. Without a strong understanding of the cost of goods sold, you might find it hard to get a clear view of your business's true performance and business decisions, and ensuring things are within ideal range or healthy range. 

What Are the Average CoGS (Cost of Goods Sold) In the Restaurant Industry? 

To ensure a profitable business, the Food Service Warehouse recommends your restaurant's cost of goods sold (CoGS) should not be more than 31% of your sales. This is the rule of thumb as regards CoGS and a way to ensure you run a successful restaurant. While fine dining restaurant CoGS may be a bit higher due to more expensive food costs, pizza shops should aim for the low to mid 20% range, having lower operating costs. 

How To Calculate Cost Of Goods Sold For Your Restaurant 

The cost of goods sold is calculated as follows: 

Beginning Inventory + Purchased Inventory – Ending Inventory = Cost of Goods Sold (CoGS) 

Assuming you want to get a better idea of your inventory from last month. You had $3,000 of leftover inventory at the start of the month, including food, drinks, beverage items, spices, and fresh ingredients, and other materials — anything and everything it takes to get a meal on a plate and a drink in a glass. 

Throughout the month, you ordered $8,000 of additional inventory and ended the month with $2,000 worth of inventory.  

Cost of Goods Sold = $3,000 + $8,000 – $2,000 = $9,000 

In this example, your restaurant's cost of goods sold — or the amount of money spent on food and drink served in your establishment during the month — reaches a total of $9,000.  

CoGS Ratio 

CoGS ratio, also known as CoGS to Sales Ratio, refers to the ratio of your cost of goods sold compared to the money generated through sales in a certain period. The lower the ratio the better, as it means you'll have spent less money to make more.  

How To Lower Your Cost of Goods Sold 

In restaurants, a lower CoGS number typically means a higher average profit margin. It is important to remember that a lower CoGS is not always a good thing. For example, if you did not have any CoGS, it means you did not sell anything. To be able to stay consistent with sales numbers while being able to purchase food and inventory with a smaller amount of the profit made is what you hope to achieve. The big question is how to go about implementing this without compromising the quality of your menu items. Remember that raising menu prices has no direct effect on your CoGS. Menu pricing and menu items are independent of how much you pay your suppliers for them. 

Some of the ways the cost of goods sold can be reduced include: 

Purchase Products At A Lower Price Point 

The option to lower your CoGS is considered a last resort in most circles. If you have ever experienced a restaurant's quality decline, but the price point was the same, you would notice. And your customers would, too. That is why purchasing products at a lower price point to bring down CoGS is not the best idea. 

One way to purchase cheaper products without settling for lower-grade items is to price shop. Talk to different food suppliers to see who has the best overall prices that are a good fit for your restaurant. 

For instance, one supplier may have better deals on steak than chicken, but if you sell drastically more chicken than steak, the price difference may mean you are better off going with another supplier who charges more for steak because you will retain more profit from your more popular menu items that feature chicken. 

Also, do not be afraid to reach out to your supplier and re-negotiate any standing deals. If you are struggling to maintain a reasonable CoGS, chances are your supplier would rather lose a bit of money than all your business. 

Use Specials And Seasonal Menus To Keep Inventory Lean 

To promote sales of your specials and stock items, you should consider using creative menu design to reduce food waste. Make some price changes so that you can anticipate the seasons and avoid making unnecessary inventory that gets lost in the inventory piles. 

In general, meticulous inventory management is the best method for decreasing the cost of goods sold. By implementing measures for separating and categorizing food waste, maintaining detailed inventory logs, and applying food waste procedures, you can ensure the quality of your food stays high, save money, and keep your kitchen running smoothly. 

Monitor Inventory Closely 

Your CoGS can exist independent of your sales. This usually happens because of poor inventory management. If your restaurant does not have clear back-of-house guidelines or procedures in place, you could be losing money every shift due to inventory spillage. Improper portioning, over-ordering, waste, and theft can take a substantial chunk out of your restaurant's CoGS without adding a penny to your bottom line. 

Make sure you have a reliable restaurant inventory management system in place to closely monitor the ins and outs of your restaurant inventory. If you are not too careful, your CoGS number will be much lower than it needs to be, and your wallet will be emptier than you will want it to be. 

Buy In Bulk 

Some restaurants bulk-buy certain supplies to benefit from supplier discounts. Buying in bulk can help you lower your CoGS if you are purchasing inventory that turns over often or has a long shelf life. 

For example: If you can buy eight ounces of chicken at a cost of 50 cents per pound less, but only need to purchase it for your dishes at eight ounces per entrée, you can avoid spending 25 cents per entrée by having a bulk supplier. 

One question is whether to get something in bulk. Freshness is one element to consider; it might suffer if left in the freezer too long. In addition, you need to know how much storage space you have for big items in your storage areas. Your kitchen staff will be making their way through obstacles such as the boxes that are hindering them. 

FAQ (Frequently Asked Questions) 

What Is The Average Profit Margin For A Restaurant? 

The average profit margin for restaurants is between 2% and 6% 

What 5 Items Are Included in the Cost of Goods Sold? 

The items that make up costs of goods sold include the Cost of items intended for resale.  

• Cost of raw materials. 
• Cost of ingredients used to make the food. 

• Direct labor costs. 
• Supplies used in either making or selling the food.  
• Costs of transporting the food. 

What Is the Difference Between CoGS and Expenses? 

Your expenses include the money you spend running your business. The difference between these two lines is that the cost of goods sold includes only the costs associated with the manufacturing of your sold products for the year while your expenses line includes all your other costs of running the business. 

Is It Better to Have a Higher or Lower CoGS? 

A business strives for a low CoGS ratio, meaning the costs of producing a product are low compared to the sales generated. Conversely, a company will prefer a high gross markup, meaning it can sell the product at price well above the cost of producing. 

What Is A Good Profit Margin For Retail? 

A good online retailer’s profit margin is around 45%, while other industries, such as general retail and automotive, hover between 20% and 25%. 

Are CoGS a Debit or Credit? 

When adding a CoGS journal entry, you will debit your CoGS Expense account and credit your Purchases and Inventory accounts. Purchases are decreased by credits and inventory is increased by credits. 

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