Hi, I’m Donna Bordeaux with Sweet Tooth CPA. Let’s talk about the cost of goods sold, your cost for the ingredients to provide your products, and where those should be in a key performance metric. Now key performance metric is just a fancy way of saying “What percentage should that be if my revenue?”
Your cost of goods sold for baked goods is typically on the low side for most food vendors. So if you were a steak house, obviously you’d have much higher costs, but in a bakery situation, you’re going to have your sugars, butter, flour, et cetera. Those expenditures should be in the range of about 20% of your revenue. What do you do if that’s off? What if it’s 25% or 30%?
First, we need to watch for food waste. Are you wasting products? If you’re not, that generally means your pricing needs to go up. So if you’re wanting to calculate how much you should sell a product for one of the ways you can look at it is looking at your cost of goods sold divide that by 20%, that will give you the pricing.
Now we’re oversimplifying a bit because we’re not including labor costs, which are typically higher in dessert and sweet shops because you’ve got very skilled products that you’re making. You’re not just putting some chicken nuggets in the fryer here.
So if your cost of goods sold numbers are not in line, or if you’d like to look at what else you need to have in mind with your dessert or sweet shop, I’d be happy to chat with you. Just click on the let’s chat icon in the upper right corner of our website, and we’ll schedule a time to discuss your needs and discuss how we can help you. I’m Donna Bordeaux with Sweet Tooth CPA.
Donna Bordeaux, CPA with Sweet Tooth CPA
Creativity and CPAs don’t generally go together. Most people think of CPAs as nerdy accountants who can’t talk with people. Well, it’s time to break that stereotype. Lively, friendly, and knowledgeable can be a part of your relationship with your CPA as demonstrated by Donna and Chad Bordeaux. They have over 50 years of combined experience as entrepreneurial CPAs. They’ve owned businesses and helped business owners exceed their wildest dreams. They have been able to help businesses earn many times more profit than the average business in the same industry and are passionate about helping industries that help families build great memories.