For partners: get a better understanding of COGS and how we use them within stacks
What does COGS mean?
COGS means Cost of Goods Sold.
The Cost of Goods Sold is the direct cost a restaurant has to produce the products (ingredients and packaging)
It is not including other costs that a restaurant has, like staff or rent for example (indirect costs).
How is the COGS % calculated?
COGS / Recommended Retail Price (RRP) = COGS %
What is included in COGS and what is not?
Notably, COGS includes certain elements of wastage that occur when making the products. It includes basic preparation wastage that is common in kitchens, for example sauce shrinkage (sauce left in the bottle) and shrinkage when cooking certain ingredients.
It does not, however, include any wastage that comes from cases in which (for example) mistakes in ordering supplies lead to ingredients being out of shelf life and having to discard them.
It is important to note that, as well as ingredients, COGS also includes the packaging use per an item but does not include the cost of the power or gas used to make the item.
How does PWB calculate and maintain a weighted average COGS of 30%?
Let us explain by talking you through the details of two of our stacks: Chicken and the Mexican.
The sales mix within the Chicken stack: Seoul Chicken, Flip the Bird and Wham Bam Wings (Wings and Tings) =
- Seoul chicken ≅ 65% of site sales @ ≅ 29% COGS
- Flip the Bird ≅ 29% of site sales @ ≅ 29% COGS
- Wham Bam Wings ≅ 6% of site sales @ ≅ 42% COGS
This adds up to a weighted average COGS of 30%
The sales mix within the Mexican stack: Papi Taco, Fiesta Mexico and Rebel Rito =
- Papi Taco ≅ 55% of site sales @ ≅ 29% COGS
- Fiesta Mexico ≅ 29% of site sales @ ≅ 29% COGS
- Rebel Rito ≅ 16% of site sales @ ≅ 30% COGS
This adds up to a weighted average COGS of 29%
These examples show that some menus will have higher or lower COGS than others, but the average will always come out to 30% or below.
To support and help you manage your stocks and ordering
We have designed our online ordering portal Apicbase. It is THE tool to help you order the right quality ingredients (from the PWB Brakes account), help reduce waste, and maximise your profit.
Other frequently asked questions:
- How can I achieve these COGS?
These calculations are based on the cost of ingredients and packaging from our approved suppliers which are available via Apicbase.
- Is PWB protecting my gross margin?
Yes, this is a fundamental part of our service. As a business we’ve promised to keep your blended Cost Of Goods Sold (COGS) capped at 30%. Every single stack we develop hits an average weighted COGS of no more than 30%, and some are lower.
- Does this mean every product costs less than 30% COGS?
No, we’re not promising this - some products will be lower and some will be higher. You pay us to do the maths and blend it together to hit 30% overall. For example, your sweet potato fries might be above and normal fries below 30%. Our menus offer the perfect mix of products for a consumer at prices that ensure people buy from you.