3.1 Cost of goods sold (COGS)
Ingredient cost, commonly referred to as cost of goods sold (COGS), describes the direct cost incurred in the production of individual dishes. In foodservice, this cost is composed of the quantity and purchase price of ingredients, adjusted for yield loss.
To determine the true ingredient cost, it is necessary to calculate the true cost per gram or kilogram and multiply by the quantity required by the recipe. An understanding of COGS enables operators to identify the minimum selling price of a dish to cover direct costs, which is a prerequisite for achieving purchasing efficiencies and improving profitability.
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