Get a Handle on Your Food Costs

by Dan Slobodien

Other than payroll, Food Costs is the largest expense in almost every restaurant operation. Tight control over them is essential if the restaurant operator has any hope to be profitable. Fortunately, food costs are a fairly flexible expense, and can be easily controlled with some vigilant monitoring. Most operators always want to drive for more sales to increase profits. However, if you are losing money on each sale, this is actually counter-productive. A far better way to increase profitability is to maintain costs. Cutting costs effectively goes straight down to the bottom line as pure, clean profit.

Follow these simple steps, and watch your profit level soar:

1. Cost out each and every recipe on your menus. I know that this is tedious, at best. But, how can you set a reasonable budget target if you do not know for certain the cost of every recipe? How can you set your pricing in a logical manner? You should know what profit margin each recipe contributes to your bottom line. Then, you can price it appropriately and also encourage your staff to recommend to your guests the more profitable items.
   
   Of course, these costs need to be reviewed and revised periodically. For example, if beef costs are rising, you should be aware of this in order to react in a timely fashion.
    
2. Ascertain your Food Costs on a weekly basis. Conventional wisdom has always dictated that you should figure out your food costs on a monthly basis. While that is better than nothing, it is far too late if you are over your budget. You have already wasted too much money. Consider this: If your food sales total $100,000 per month, and you target a 30% food cost, you should spend $30,000 per month on food. However, if you discover that your food costs are running at 35%, then you have actually spent $35,000. Wasting $5,000 per month is some serious cash. However, if you had been monitoring your costs on a weekly basis, and taken corrective action, you would have potentially limited the damage to a total of approximately $1,250.
   
   To ascertain your food costs, simply total up your food purchases for the week. Unless you are experiencing some budgetary problems, there is really no need to take a weekly physical inventory. Simply take inventory on a periodic basis to make sure that you are on track and that your figures are correct.
    
3. Control the waste. This is the trickiest part, and requires the most attention from managers. Waste can take many forms, both obvious and subtle. How much winds up in the garbage cans? Why is it being thrown away? Here are some things to look for to help minimize waste:
   
   Examine your ordering systems. Is the proper amount of food being ordered for the level of business and demand?
   
   Examine your storage. Are perishable food items being properly rotated (First In, First Out)? Everything should be clearly marked with the date of receipt. Is everything being held at the proper temperatures to retard spoilage? Is everything neat and orderly, with no cross contamination?
   
   Make it a habit to check out the diners’ plates as they go to the dishwasher. Do they appear to be licked clean, or is there a considerable amount of food leftover? Do you need to revamp your portion sizes?
   
   If your food is prepared to order, always make sure your cooks are preparing the correct amount of food. For example, if a recipe specifies 4 oz. of beef, and your cook is using 6 oz. portions, your food costs for that dish have now increased by 50%. If you costed out the dish out at $4.00, it now costs you $6.00. It is easy to see how quickly this can add up. I once fired a cook who always seemed to have half of a recipe still in the pan after plating it up. This is inexcusable, and must be stopped. After all, the cooks make the same dish hundreds of times. They can, and will, quickly get a feel for the proper amounts needed if they know that you are watching. Also, insist that all portioned products be weighed on a portioning scale.
   
   A more subtle form of waste is over-preparing. If you sell 10 orders of a your shrimp dish each night, but the cooks prepare enough of the ingredients each day to make 20 shrimp dishes , then half of it is very likely to wind up in the trash. Prep levels should always be examined. All of your cooks and chefs should be well aware of sales levels for all the respective dishes, and prepare accordingly.
   
   If training and consistent monitoring are not having the desired effect, try more graphic messages. One place I worked had a clipboard nailed up in a conspicuous location in the kitchen. Anytime we threw out a food item, we were required to write that item down, and to initial it. As you can imagine, this was resented by the kitchen staff, but it certainly limited our waste! Another method would be to put a large, clear container in the middle of the kitchen. All food waste should be thrown into this as a visual reminder that waste needs to be strictly limited, if not eliminated. If the visual reminder is not enough, weigh it at the end of each shift. Make a game out of it – set goals to get the weight of the bucket down to acceptable targets. Reward the staff when they achieve these goalsStrictly controlling your food costs is mostly a matter of awareness. For the overall financial well-being of the restaurant, your staff should always be acutely aware of the importance of maintaining the budget. After all, they have a stake in this, as well If they know that it is important to you, they will consider it to be important, as well.
   
   Daniel Slobodien, graduate of Cornell University, was head Chef and former restaurant owner for eight years--(732-549-8556)