The restaurant business is famously a difficult one. Even successful and famous chefs are frequently forced to close the doors on one or more of their operations, for a variety of reasons. Restaurants in general run on very tight profit margins, and a difference of a few percentage points can mean the difference between success and failure. Keeping food costs in line is one of the great fundamentals of restaurant management, and it requires attention both in planning and execution.
Perform a "yield test" on your highest-cost and highest-volume ingredients.
Compare the weight before and after cooking, and verify the number of portions and quantity of waste you generate. Calculate your true cost per portion, and compare it to your current costing model. Adjust your costing, as necessary.
Shop aggressively for your most important ingredients.
Some chefs do this by playing one supplier against another, others by building close relationships with a small group of favored suppliers in order to get preferential pricing. Offer to commit to a specific quantity of product over a set time, in exchange for a guaranteed price on a product .
Analyze sales of your menu items, after updating your food costs.
Each menu item represents a percentage of your overall food cost, and a percentage of your overall revenue. Items which are high profit and high volume are ideal. Low-profit items should not be your highest sellers, unless their volume is high enough to compensate for the low margins.
Drop any menu items that detract from your overall mix, or rework the recipes to make them more profitable.
Substitute a cheaper side dish, or a less costly sauce. Describe the new version of the dish as healthier, tastier, more colorful or more local, as appropriate.
Change the placement of items on your menu, to encourage sales of profitable items and discourage sales of unprofitable items.
Hire a consultant, if necessary. There is a strong body of literature within the industry to explain the subtleties of menu design.
Inspect a number of plates at random, every shift, to ensure that your actual portion size corresponds to your planned portion size.
Overly generous portions will rapidly erode your profit margins. If specific staff are chronic offenders, allocate time to coach them. Point out the direct relationship between profitability and raises for the cooks.
Replace your existing serving utensils, where applicable, with utensils that measure the food as they portion.
Ladles and scoops of appropriate size make it fast and easy to produce the correct portion size. Your staff will always follow the path of least resistance, so make sure it leads in the direction you want.
Plan ways to use up unsold portions of your commonest ingredients.
Always know ahead of time that today's roast will be tomorrow's stew and Tuesday's pot pie. Challenge your kitchen staff to find creative ways of using up any surpluses. Reward their ingenuity with a small cash incentive, free staff meal or similar bonus.
Monitor food waste in your kitchen.
Use clear trash bags, so you can always see what is being thrown out. Question any large items that are discarded. Enforce a first-in, first-out system in your cooler to minimize wastage. Ensure that all perishable food items are dated, and that older items are used first to ensure freshness.
Ask your kitchen staff for their suggestions.
Your prep and line cooks are the ones who handle the food on a daily basis, and can often point out better or more efficient ways to work. Ambitious younger cooks may jump at the opportunity to show that they can help you improve your bottom line.
Join industry organizations, and subscribe to newsletters.
Your peers, and the various consultants and academic researchers who work with the industry, are a valuable resource. Allocate time on a weekly or monthly basis to read industry publications, or meet with others in the business. Ask everyone for ideas on how to improve your food costs.
- "Profitable Menu Planning"; John A. Drysdale et al.; 1998
- "Planning and Control for Food and Beverage Operations"; Jack. A. Ninemeier; 2001
- Photo Credit Jupiterimages/Photos.com/Getty Images
Tax Penalty for Early Withdrawal on Profit-Sharing Accounts
Profit-sharing plans share many characteristics with other retirement plans, including mandatory distributions at the age of 70 1/2, restrictions on contributions and...
What is Gross Profit Percentage?
Business owners and managers often measure their company's performance by applying mathematical formulas to their financial information. One such formula is the...
How to Start a Side Business
First of all, let's distinguish between a small business and a side business. People often misunderstand the nature of the two ventures....
How to Calculate Labor Cost Percentage
Labor cost percentage is a financial term used to describe a business' labor costs relative to its overall revenue. Being able to...
How to Calculate Food Cost in a Restaurant
If you own a restaurant, you know the importance of calculating food cost for such things as proper pricing and inventory. Proper...
How to Calculate Cost Margin
Profitability is based on two things: sales and costs. The difference between the two provides the basis for calculating total net income...
How to Reduce Food Costs in Restaurant Management
One of the most important ratios in restaurant management is food cost. Food cost is calculated by dividing the cost of the...
What Is the Difference Between Economy & Premium Economy?
Many airlines offer three different classes for air travel: First class, Business class and Economy class. Some airlines also offer a class...
How to Calculate Margin Percentage
Calculate gross margin percentage by taking the gross margin dollars and dividing by the sales. Get profit margin percentage by dividing the...