How to manage food cost?

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Food cost  is a critical component of the restaurant and very often the it is very important to manage food cost in your restaurant as it is the most expensive line item in the restaurant pnl. Food cost in simple words is the total cost of all food consumed in the restaurant.  If your restaurant is struggling to make money, it will make sense to check this critical component of business.

So how do you manage food cost to improve profitability?

Food cost can be brought under control by reducing waste. Wastage can happen in any point of the food flow from receiving to finally getting it served to the customer. Hence it is critical to keep all the parts of the process under check. While this post is a long one, it contains steps and process to help you keep an critical watch and manage food cost in your establishment.

Purchasing

Essentially the first point of the cost chain, there are certain key points to remember in this phase

  • Make a proper specification chart for your ingredients so that you know what to buy and buy as per the specification
  • Identify vendors based on preset criteria and ensure you purchase from them so as to get volume discount and cost benefit
  • Know what is in season and make your menu as per that if possible to benefit from the pricing
  • Do a quarterly market survey in your locality from where you buy to see if there are any cheaper vendors available and make use of it
  • Place orders based on expected business volume, not on Standing order basis

Receiving

  • Ensure the person who receives the materials is qualified and knows what is to be accepted and what should be rejected
  • It is a best practice to keep the person who placed the order separate from the person receiving it so that there is some controls in place
  • Check all deliveries and ensure that the weight of the material on the invoice is what you are receiving.
  • Calibrate the weighing scale atleast once every 6 months so that there is no slippage in the weighing of the ingredients
  • Sign all the invoice and ensure the discrepancy is noted so that it can be reduced from the bill

Storage and Issuing

  • If possible limit the number of person having access to the stores. Having said that, it is a good practice to keep the store secured and locked.
  • Ensure that the perishable items are tagged and you follow First in First out(FIFO) principle.
  • Make sure the refrigerator where you hold perishable , like meat, dairy and poultry is maintaining proper temperature or it might lead to spoilage
  • Issue food as per proper requisition. In a small restaurant, the general practice is to buy materials for daily use and there is no storage. However if your restaurant has storage, it is a good practice to follow a written requisition system
  • Make a non moving item list monthly and utilise in daily specials. Non moving items can have a big impact on the profit of the restaurant since it blocks up money and also if it perishable items prone to spoilage

Menu planning and Pricing

Often your food cost is simply a matter of charging right price for your menu items. Having said that, we don’t live in a perfect world. In the real world, there is competition in the restaurant industry and sometimes we are not able to fix prices we want. In those circumstances these tips will help.

  • Plan your menu around seasonal products and things which are true to your concept.
  • Calculate potential food cost of all dishes on the menu
  • Use the right ingredients and keep the garnish simple which guest appreciate
  • Use the menu engineering tool every 6 months to understand which food items are popular and you need to retain on your next menu
  • Review the portion size of the dishes you are serving and adjust it according to the pricing strategy
  • Be aware of price increase in the market and review your restaurant pricing often
  • Design your menu to highlight low cost high profit items so that you can sell more of it.

Food Preparation

  • Prepare food as per the forecasted business volume.
  • Your chef should communicate to his team how much to prepare for the day
  • Make sure every dish on the menu being made has a recipe with food cost in it
  • Ensure your team sticks to the standard recipes and uses counts / pieces or qty of ingredients as per the recipe
  • Food should be cooked to proper specification to eliminate returns to the kitchen by the guest
  • Check the yield of the prepped product on a regular basis and train team members who show a variation to the accepted norm. For eg. if a lamb leg will give 40% boneless meat as per your calculation, ensure you are regularly getting that yield  and reduce wastage
  • Ensure your team is using trimmings to make stocks which can enhance the flavor of the dishes and lead to repeat customers
  • At the end of the day, make sure all items not utilized are stored properly in refrigerators to ensure freshness

Service

  • A kot is an essential part of the food cost control mechanism. It forms the basis of control in the restaurant operations. No verbal order should be accepted by the kitchen
  • If the restaurant is a buffet restaurant, keep small portions of food on buffet and replenish often

Wastage

  • Check your garbage bin often to ensure materials are not being thrown away
  • It is a good practice to weigh your garbage going out to ensure items are not being dumped in the thrash due to over production
  • If you provide bar snacks, ensure it is stored properly so that it does not go stale

Training

  • Ensure you train your team regularly on the importance of managing food cost.
  • Educate the team to upsell high profit items on a regular basis

Incase you want a simple way to manage your food cost, consider buying this format to manage the process effectively

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