How To Control Restaurant Food Costs In 6 Easy Steps
Minimizing overhead costs is a crucial element in the survival and financial success of every business. This is particularly critical during the first few years, especially in the restaurant business where profit margins are razor thin. While high-end restaurants will have higher food cost percentages than casual or fast-food restaurants, in general, food cost — the percentage of total restaurant sales spent on food — should be no higher than around 30-35%.
The formula for controlling food costs consists of 6 major components — streamlining vendor purchases, ultra strict portion controls, astute food waste management, balancing menu items, real time food cost monitoring, and preventing employee theft.
Follow These 6 Easy Steps to Control Food Costs
1) Streamline vendor purchases
Only order what you need. By keeping your food inventory fastidiously up to date, you will know precisely what you need to order each month. But for items you use in large quantities, order in bulk. When possible buy food direct from the source to cut out the middle man.
2) Ultra strict portion controls
Training your kitchen staff to maintain strict portion controls is crucial in meeting food costs, and in providing a consistent dish for your patrons. All meat should be weighed, while other items can be dished out or stored in portion controlled containers.
3) Astute food waste management
To decrease waste from spoilage, meats and other foods with a limited shelf life should be ordered daily. Make a special effort to utilize all the ingredients you buy, and closely monitor the “use by” dates. Inferior cuts of meat should be used in stir-fry dishes and sauce and soup stocks. And special dishes should be created to accommodate all surplus items. Chris Chung, owner of AKA Bistro, is careful to train his employees on his rules about not wasting food. A factor that’s especially crucial for a restaurant that specializes in a high-cost—not to mention highly perishable—item like seafood. Chung makes a point to have his cooks understand the value of using every piece of a product and to be creative with the scraps.
4) Balance menu items
Balance expensive menu items with items that have stable prices by serving, for example, fresh lobster and beef, or steak and crab, with low cost items such as potatoes, less expensively priced chicken or pasta dishes. Ethan Stowell, who operates four successful restaurants in Seattle, advises chefs to be “more interactive with servers” and to tell them what menu items needs to be pushed. When food costs are running higher than he likes, or when business is dropped off, he tells his wait staff what low cost menu items to sell to customers. “If you have lower food cost items on your menu, you have to motivate your staff to sell those at certain times,” he explains.
5) Real time food cost monitoring
Make sure you track food costs on a daily basis to ensure that you’re truly reducing costs. By keeping a close eye on food costs, you’ll know if a supplier is overcharging you on monthly orders. Ethan Stowell and each of his kitchen leads know where they are each day. “I know exactly what my food costs are daily; I look every day,” he explains. “If I find out in the third week [of the month] that food costs are 5% too high, I can look and say we had a soft month, that’s the reason, or we’ve been selling too much of this or not enough of that. I look at what menu items are not selling. If you have a consistent idea of where you’re at, it gives you an idea of where to look.”
6) Prevent Employee Theft
Carefully monitor your food deliveries the moment they arrive to prevent pilfering. Require that all sales be entered in the cash register before any food is prepared to prevent duplicate, undocumented food orders. And as an incentive against stealing, consider offering a free meal to employees to prevent the theft of food.
Be consistent with menu pricing
Stowell maintains price caps at each of his restaurants. He explains, “My goal in Seattle is to keep prices as low as possible. I have rules with maximum prices at each restaurant so guests don’t feel uncomfortable going.” And he continues, “I don’t preach if you’re food cost is high, you’re not charging enough. I don’t believe in that. If your food cost is high and you say you’re not charging enough—that’s how restaurants get into trouble! By raising their prices when they can really make their food costs work for them, and make their menu function in a way that is good for the restaurant.”
Follow these 6 Easy Steps to Control Restaurant Food Costs and you’ll be on your way to profit in no time and sign up for Socialdraft to manage your restaurant’s social media pages.