Explain the process to identify food cost percentage problems.

Managers can identify concerns directly related to food cost percentages. There are three factors that should be examined and compared: standard food cost percentage for the operation, composite (potential) food cost percentage based on the menu product mix, and actual food cost percentage calculated from the income statement. If they do not match, this indicates problems that need to be investigated. The manner in which these factors do not match will give managers insight into where the problem lies, and whether it is related to the menu or to the actual activities within the operation.