The new year often inspires us to aim for a fresh set of goals. For us in the industry, such goals include reducing your restaurant's food cost. Your food cost is a determining factor for many elements of your restaurant, but most importantly, it dictates your profit margin and your subsequent menu planning decisions.
If lowering your food cost is one of your ambitions this year, these 9 fresh ideas and timeless reminders will help get you on the right path, so you can keep your customers happy and coming back for more.
Choose the right supplier
One of the main reasons restaurant owners are stuck with higher than average food costs is because they haven't taken the time to choose the best food vendor. While the process may be time-consuming, the reward is well worth the effort.
Don't be tempted to settle for the first supplier you meet with. Often, their offers sound too good to be true — and they are. Instead, meet with at least three or four other vendors before making a final decision. Most vendors are willing to accept a lower profit margin if you do a more significant amount of business with them. Some will even undercut other vendors just to secure your business.
Tackling food waste can be approached in many different ways, all of which are vital to your restaurant if you’re striving to reduce your food cost. Also, note that food which is purchased and then thrown away gets factored into your food cost percentages and will definitely strike up the average.
Below are three ways to prevent food waste at your restaurant:
Although this sounds obvious, shopping smart is one of the most straightforward approaches you can take to prevent food waste at your restaurant. Buying more food than you need will directly increase your food cost. Try having multiple deliveries scheduled throughout the week instead of one large one at the beginning.
Come up with recipes and stick to them. Practice portion control to ensure that each dish contains the exact amount of ingredients necessary. A few extra grams on each plate adds up to a significant amount of food waste at a busy restaurant.
Store food correctly
One of the most obvious methods of preventing food waste is merely to ensure that food is stored in the right locations and at the right temperature. Nothing is worse than finding out all your chicken has spoiled — especially when you're halfway through a busy shift.
Check Inventory Regularly
Keeping track of inventory at your restaurant is not just a recommended practice, we believe that it is a required one. Attempt to take inventory at least once a week, if not more, to understand your kitchen stock better. Your inventory is directly related to food cost. Understanding how much is being spent every day on food is essential.
Cost the Menu
It makes perfect sense that when you are attempting to reduce the food cost at your restaurant, one of the first things you do is cost your menu. Food costing is a procedure that needs to be done regularly to ensure price consistency across the board. Despite the tedious nature of this task, it is absolutely necessary to be able to assess which of your dishes are the most profitable and which are the least.
Tracking food prices is a tedious job. Is there something easier?
FoodRazor makes this job easy. As you take photos of your invoices and upload them to the platform, the systems automatically digitise all your transactions by line items — recording unit price, quantity, and product names. There’s even a report for “Product Price History”!
Food costing can bring alarmingly high food costs to your attention. This knowledge allows you to make a decision about whether a dish gets to stay on the menu or if it's time for it to go. Once you have determined which of your items are too pricey, you can begin to look for alternative suppliers for each ingredient— or, alternatively, new dishes to replace those using these ingredients.
Work with your Staff
Sometimes, large food costs come down to your staff members. Make sure that you have supplied your team with proper training, equipment and a platform to speak up about any difficulties they may be encountering.
Proper guidance when it comes to finances is essential. It is common practice to depend on the kitchen staff to receive and create orders for ingredients. Your team should be encouraged to analyze every invoice and delivery note, and check the delivered quantities and qualities to ensure they match up. A few short deliveries are all it takes to bump up your food cost percentage.
Supplying your staff with the necessary equipment actually plays a significant role in reducing your food cost. Wouldn’t it be great if the job didn't require you take up the tedious task of typing invoice data into spreadsheets? Technology is the answer.
Restaurant software — with features like Inventory Management, Invoice Management, Order Management, etc.— saves huge amounts of effort and time in managing the back-of-house processes. With such tools, the chances of errors are very minimal as compared to manual entries.
Whether you're in charge at your restaurant or you have a manager in place, the restaurant management must keep its employees in the loop. If food costs are too high, let everyone know so they can each do their part to help out. Of course, the best is to have a database where everyone is up-to-date with the latest changes.
Record ALL Sales
This might sound obvious, but improperly recording sales at your restaurant could negatively affect your food cost. How?
Let's assume your restaurant generates 10,000 SGD in sales every week and operates at 35% food cost, this means the restaurant is spending 3,500 SGD per week on food. If for some reason, 10% of your sales aren’t being recorded, this pushes up your food cost to 38.8%.
No dish should ever leave the kitchen unless it has been added on your POS.
Lookout for hidden costs
Way too often, restaurant operators ignore the costs regarding their most commonly used ingredients, which can surprisingly end up costing the most. A few examples of these ingredients include rice, frying oils, seasoning, and cooking butter.
The reason these are often overlooked is that, relative to other ingredients, these are usually the cheapest items to source. Most restaurants fail to consider how commonly they are used.
Once you’ve realized the issues these items often pose, you can start to look for cheaper options or change the recipes and procedures to use a more controlled amount.
Beware of operational costs
A significant cause of increasing food cost is what we will refer to as “operational costs"— the costs associated with operating a restaurant. These include everything from rent to promotional discounts that you may offer your customers.
While these costs are often random, you can’t entirely omit them from your food cost calculations. However, you can take shielding measures to prevent these kinds of incidents from happening, and engage in precautionary measures to ensure that a promotion doesn’t drive up your food cost at the expense of bringing in a few more diners.
These tips will be useful to your restaurant — or at least spark some food for thought.
More tips: We’ve got more advice for you! Avoid these 3 common restaurant management bottlenecks at all costs.