Food Profitability, Food Waste & the 13.5% Vat Increase

It’s absolutely paramount that any food business knows their food gross percentage margin GP% at least once a month. But it’s even more important what action is taken with the result. It’s also very important that the result is calculated by an independent Stocktaking Business. It’s not recommended that a staff member produce your stocktaking results, why? Because how often will they tell you bad news. Things don’t go right all the time so it’s important to have this correct information at the ready and the right action taken. This is why you  should always out-source your Stocktaking requirements.

What is a good GP%. In my opinion there’s no correct answer to this question. As an average, a very good GP% would be 72% and a very poor GP% would be 50% and below. A large five-star hotel in Dublin could potentially achieve an 84% GP% but if a smaller rural business tried to achieve the same margin it would be out of business very quickly. Why?
What a food GP% should be depends on many factors. The style of service, type of business, the type of food, the businesses circumstances, what are the current overheads, competition and the external factors, customer perception etc. An expected high GP% result could be required to cover a high wage bill due to the complexity of service. Rent & rates could be high due to location. So, it’s a delicate balance to get right.
One way to increase the food gross percentage margin is to review the food waste being generated within the business. There is a free online tool available were you can enter your figures and the system will tell you exactly what your position is with regard food waste. This system has been approved by experts in industry including County Councils, the EPA, The Food Waste Charter and and is part of the Food Waste Aware Campaign.
By starting to tackle your food waste you can quickly pull back the very short sighted 50% vat increase due to start in January.