Food Cost Control 101
Is your food cost running out of control? Keep reading for tips to keep costs in check:
Almost everyone in hospitality has seen some type of F&B cost run in the wrong direction at some point. I’ve worn many hats in the food and beverage world, from management to being a cook, host, busser, bartender and waiter, and can say from many years of experience that all positions play a role in keeping food costs low. There’s never an easy answer for high food cost and, in most cases, it’s a mix of issues, errors and/or poor communication that may lead to its rise.
At Savory Hospitality, we approach this issue in a manner that sets us apart from other consultants. As restaurant professionals, we strive to solve the puzzle of high food costs from the ground up—not by simple quick fixes such as raising menu pricing or lowering the portions and quantity of dishes, as we know that no F&B establishment will grow in this manner.
Your goal of a good food cost will greatly depend on your type of restaurant. It’s not about one cost fits all. A steak house vs QSR will have greatly different food costs as well as direct costs. Set a percentage that you, accounting and chef feel will make a profit and quality that will make your restaurant stand out for the rest.
Here are some great cost controlling tips to start regaining control of your food costs:
1. Clean up your inventory list: remove unneeded items and fix errors in item pricing with up-to-date vendor pricing. Many inventory errors are due to filling in the wrong unused item with a higher price vs the correct one.
2. Calculate your inventory: Many resources for calculating your inventory such as online programs, excel sheets and calculators are available. Make sure the inventory and invoicing is being consistently done on a weekly or monthly basis. Some people do inventory every week ending on a Monday, which for many is a good time due to the lower level of inventory due to the weekend depleting stock.
The Formula for Inventory Food Cost:
Food Cost % = (Beginning Inventory + Purchases – Ending Inventory) / Food Sales
Your data: $10,000 beginning inventory, $2,000 in purchases, $10,500 ending inventory, $5,000 in sales.
Your formula: FC% = (BI + P - EI) / S
(10,000 + 2,000 = 12,000) - 10,500 = 1,500
1,500/5,000 =.30 or 30% food cost
3. Review invoices: Compare pricing from a time that food costs were in the right position. Take a look at more than the price but the measurement and pack size as well. Many vendors are playing with pack measurements due to increasing costs on production. Talk to any retired bar manager and they will tell you that they remember the time when a bag in the box cola was under $25.
4. Start monitoring waste from kitchen prep to errors and spoilage. Adjust prep to lower waste or over production. Many times the waste can be used in stocks. Talk to your vendor about better cuts with less waste. Place a list near the main cooler and have all staff place the spoilage items on it. This will give you better knowledge about ordering as well for the following week.
5. Learn yields: many lower priced items might be costing you more than you think if you are not aware of the true yield. A shotrib rib cut at $6lb might have a higher yield then a top roast cut at $4lb in some cases. Knowing and testing out yields is many times eye opening for chefs and owners.
6. Review your POS system: for items with incorrect pricing. Go over your menu vs pricing as well as add-ons. For many restaurants they fail to look at pricing for adding on proteins, extra cheese and many substitutes.
7. Find out your true food cost per menu item with current vendor pricing; Go over what is going in your plate recipes with true measurements and current vendor pricing.
food cost percentage per menu item = total cost of ingredients / sale price.
The steps above are a great start towards your path of profit and growth. If you find yourself on a speed bump, just contact us for an in-depth review of your food costs.
Savory Hospitality Founder