How to Reduce Food Costs in Restaurant Management

Food cost percentage is one of the most important calculations for running a profitable restaurant.
Food cost percentage is one of the most important calculations for running a profitable restaurant. (Image: Jupiterimages/Polka Dot/Getty Images)

One of the most important ratios in restaurant management is food cost. Food cost is calculated by dividing the cost of the food by the food sales and is typically expressed as a percentage. Restaurant owners hold managers responsible for keeping food costs as low as possible. The exact percentage will depend on the restaurant type with upscale restaurants typically having a higher food cost percentage than fast-food or casual theme restaurants. The factors affecting food cost are the cost of ingredients, the amount of inventory that a restaurant must maintain, the amount of food waste and the portion sizes of each meal.

Things You'll Need

  • Menus
  • Inventory lists
  • Invoices

Calculate your food cost percentage on a daily basis. If you don't know what your food cost is or how it fluctuates with each meal, there is little you can do to reduce it. Tracking the food cost percentage will help you identify areas that you can improve upon.

Analyze your menu. The more ingredients required for the items on your menu the higher your food cost will be. Determine whether you can offer more items that share ingredients. Also, place your highest margin items in the most favorable menu spot, the spot where your patrons are most likely to see it. Evaluate your portion sizes, especially if food consistently is left on the plate for a particular meal.

Store foods safely and immediately upon arrival in your restaurant. Reduce food waste by opening paper boxes and storing foods in air-tight containers. Use the first-in, first-out method of inventory and storage so that food gets used before it spoils. Conduct weekly inventories to help identify food spoilage or waste.

Schedule someone to receive deliveries. Train this person in correctly checking deliveries against invoices, immediately storing food and checking the quality of the food received. This can reduce a great deal of over-charging and food spoilage, thereby reducing your food cost.

Check periodically to ensure that your chefs are following the portion size guidelines. Use standard recipes to control food costs and deliver a consistent product to your customers. Follow up on any dish that is consistently returned to the kitchen and determine whether the problem is with preparation or ingredients.

Lower the amount of food you keep in inventory. This can reduce spoilage, discourage theft and encourage more efficient use of product so that it is not wasted.

Tips & Warnings

  • Train your staff in the importance of monitoring food cost. Help them to understand the relationships between food cost, the restaurant's profitability and their wages and benefits.

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