One of the number one money wasters in restaurants is food. But if food costs are too high, what do you check first? Let’s use the food cost formula to calculate the food cost percentage: Total cost of ingredients / Menu item price. By calculating the food cost percentage, you will find out how much money you’re spending on ingredients compared to how much you charge for each menu item. Ideally, your food cost should be somewhere between 15 and 30%, which would give you a gross revenue per item of 70 to 85%. By exercising food cost control, you can minimize your costs and maximize your gains. What is food cost control? Simply put, it is identifying the cost of food at your restaurant and learning how to reduce it. The food cost-saving ideas below will help you pinpoint the causes of high food cost and eliminate them one by one. Without further ado, here’s how to reduce food cost in restaurant management.
1. Identify high-cost, low-profit items in your menu
Most restaurant menus have certain items that, despite costing a lot to make, don’t sell very well. These are what’s bleeding you dry. If people aren’t into them, there’s no point in keeping them around. Wave them goodbye and replace them with items you know (or suspect) your customers would love to try.
2. Optimize your supply chain
Identify gaps in your supply chain that are losing you money, and as much as possible, try to stick to one provider. Paying multiple delivery fees can be detrimental to your business. If you can find a supplier selling most of the ingredients you need, give them a chance, and you might save some money.
3. Be mindful of customer food waste
Do you regularly throw away leftover food on customers’ plates? You might as well throw your money straight into the trash. Reconsider your portion sizes if most customers can’t finish them. They won’t know the difference, and you’ll stop wasting food.
4. Don’t let older ingredients go to waste
As long as they can still be used safely, it makes no sense to throw away perfectly good, if slightly old, ingredients. Even if the bread isn’t fresh enough to be served as such, you can always turn it into croutons. Get creative with older ingredients, and you’ll reduce food waste and costs.
5. Streamline your menu
Your menu doesn’t have to be pages long and try to cater to everyone’s tastes. In fact, the longer the menu, the less decisive and satisfied your customers will be. If your specialty is pizza, there’s no need for you to also serve burgers, pasta, barbecue, salads, and so on. Avoid the paradox of choice by simplifying your menu to focus on a few things you do well. This will improve efficiency in the kitchen and inventory management. It will also provide customers with more high-quality meals in less time.
6. Consider using a food cost calculator
If you want someone else to do the hard work for you, use a food cost calculator to track food costs every day. Once this becomes a habit, you’ll start paying much more attention to how much money you spend on food.
7. Do a daily inventory on the items you use most
Daily inventory is a must-do for any restaurateur. Focus on the ten products that you constantly use and that make up most of your food cost. Keep a record of the quantity for each at the beginning of the workday. When the restaurant closes, count again to see how much of each item you’ve used. If the number doesn’t match up with the one on your POS, it might mean you’re over proportioning, wasting food, or it might be a sign of employee theft. Restaurant management software can help you keep track of your inventory more easily.
8. Minimize the number of suppliers you use
Practice one-stop shopping when it comes to your supplies, and you might manage to lower food costs. Consolidating a relationship with a supplier means you can negotiate better prices for large quantities of products or discounts for bulk orders.
9. Pre-portion ingredients for menu items
One of the factors that affect food cost in a restaurant is employees being overly generous with ingredients. This can become a real problem if the ingredients are costly. To avoid that, pre-portion your ingredients, at least for more expensive menu items. This will also speed up service.
10. Hunt seasonal ingredients
Using seasonal ingredients has many benefits for restaurants. First, the ingredients will be fresher and tastier. Second, they’ll be cheaper, which will lower food costs. Even more, you will offer diversity to your customers, which will keep them coming back. Not to mention you will also support local farmers.
11. Use the FIFO method
The “First In, First Out” (FIFO) method is straightforward yet highly effective at lowering food costs. Avoid your food expiring before you get a chance to use it by labeling everything with its expiration date. Then, place the oldest produce in front, so your staff uses it first. That’s it!