Recipe Item Setup - Include Labor Costs

Overview:

Many customers want to evaluate a recipe item's cost or their total cost of sales based on what is commonly referred to as "Prime Costs". 

Prime Costs add the cost of labor to your food and beverage costs to get a more comprehensive view of the overall cost of sales, or what an individual recipe item is costing you. In COGS-Well, you have the option to include labor costs in some, none, or all of your recipe items.  

Things to know!

• The use of labor costs is optional. 
• The features and reports that include labor will only be available if labor costs are enabled in Company Settings on the Recipe Tab. 
• Labor costs can be added to any Recipe Item. 
• Labor Costs can be included in the reports that utilize the theoretical cost of sales (Theorectical Cost of Sales, Theoretical Profit from Sales, etc.). 
• Labor Costs will need to be enabled in your Company Settings.
• Labor Types will need to be set up: Labor Type Setup.

Enable Labor Costs in Company Settings:

Prime cost includes the cost of your food and beverage (COGS) and your labor cost. Because not all customers will want to include labor costs in recipe items, we have enabled this feature via Company Settings.  Navigate to Company>Setup>Company Settings and then click on the labor tab to enable this feature (see below):

Enable Recipe Labor Cost Features: Check this box to enable labor cost features and reports in COGS-Well. 

Default Recipe Cost Type for Recipe Reporting: This field only displays if you enable the Labor Cost feature. Your selection will become the default for all of the reports that include recipe costs (Theoretical Cost of Sales, Theoretical Profit from Sales, Menu Engineering, etc.), but you can override the default when you run these reports. There are three default options (see below):

COGS Only: The COGS-only default will exclude labor costs from the reports that utilize recipe costs as the default.  For example, if the Theoretical Cost of Sales report is run for COGS only then the recipe cost of the menu items in the report will only include the food or beverage ingredient costs. 

Labor Cost Only: The Labor Cost Only default will exclude food and beverage ingredient costs from the reports that utilize recipe costs as the default. For example, if the Theoretical Cost of Sales report is run for Labor only then the recipe cost of the menu items in the report will only include the labor costs.

Prime Cost (both): The Prime Cost default will include food/ beverage and labor costs in the reports that utilize recipe costs as the default. For example, if the Theoretical Cost of Sales report is run for Prime Cost then all food, beverage, and labor costs for the menu items in the report will be included.    

Labor Types:

Labor Types enable you to configure more than one labor cost to add to a recipe item based on the job description. Please use this link for more information on setting up Labor Types. 

Adding Labor to a Recipe Item:

If Labor Cost is enabled for Recipe Items in Company Settings then a Labor Cost can be added to the Recipe Item on the Ingredients tab of Recipe Item Setup (please see below):

Labor Type: Use the drop-down to select a Labor Type from the types you defined in Recipe & Sales>Setup>Labor Types.

Minutes of Labor: Enter the number of minutes of the selected Labor Type that are required for this recipe.  In the above example, it takes a Prep Kitchen person 15 minutes to make a 1-gallon tub of chopped tomatoes. 

Labor Cost Column: This column will display a labor cost for any other recipe item ingredient in the recipe where a labor cost has been entered. 

Prime Cost Column: This column will display the combined ingredient cost and labor cost for each ingredient. 

Total Costs: At the bottom of the display, the ingredient cost (COGS cost) column is totaled, the labor cost column is totaled, and the total prime cost is totaled. The total labor cost and prime cost will include any labor cost that has been added to the recipe item you are viewing.   

Nested Labor Costs: The labor cost for a recipe item can be added as we did above, or it can come from another recipe item that is used as an ingredient and has a labor cost. For example, the Salsa Prep recipe item below uses Tomatoes Prep as an ingredient so there is a cost in the labor column.

This item also has its own labor for Prep Kitchen with 8 minutes of effort (the Labor Minutes are based on putting the Sala Recipe together assuming the tomatoes are already chopped).  In the example below, the labor cost total is $2.00 for this recipe item plus $2.812 for the Tomatoes. The Prime Cost total of $12.448 is the total food plus the total labor.  

Recipe Item that is Sold:  In the below example, we are showing a Recipe Item that is sold (Breakfast Burrito). A labor cost has been added for the Cook. The labor cost for the Salsa Prep Recipe Item is also included (see below): 

Summary: The reason for all of the above examples is to communicate that Labor costs can be assigned to recipe Items via ingredients, via labor minutes for the item, or both. 

Labor Cost in Theoretical Reporting: 

If you enable Labor Costs in recipes, then you will have the option to report ingredient costs only (COGS), labor costs only, or both (Prime Costs) when you run the Target Cost Variance, Theoretical Cost of Sales, Theoretical Profit from Sales, and Menu Engineering reports. The default will be what is configured in Company Settings (see above). 

COGS Only: The COGS-only selection will exclude labor costs from the reports that utilize recipe costs as the default.  For example, if the Theoretical Cost of Sales report is run for COGS only then the recipe cost of the menu items in the report will only include the food or beverage ingredient costs. 

Labor Cost Only: The Labor Cost Only selection will exclude food and beverage ingredient costs from the reports that utilize recipe costs as the default. For example, if the Theoretical Cost of Sales report is run for Labor only then the recipe cost of the menu items in the report will only include the labor costs.

Prime Cost (both): The Prime Cost selection will include food/ beverage and labor costs in the reports that utilize recipe costs as the default. For example, if the Theoretical Cost of Sales report is run for Prime Cost then all food, beverage, and labor costs for the menu items in the report will be included.    

An example of a Theoretical Cost of Sales with Prime Costs is below: