You Won’t Make Any Money If Your Food Cost Is Too High
Are you tired of watching your restaurant's potential profits slip through the cracks? Whether it's disappearing into thin air due to inefficiencies or getting devoured by high costs, it's time to take control. Welcome to this four-part transformative series designed for restaurant owners like you who are ready to seize success. Each episode will unveil the hidden pitfalls in your operation and provide you with the tools to create a thriving, profitable restaurant. From mastering your food cost to enhancing accountability, I'm here to guide you through the concrete steps toward achieving the financial freedom you deserve. Let's dive into the essentials of restaurant prosperity together. This is part three.
Today, we're diving deep into one of the keystones of restaurant profitability: food cost. Understanding and managing your food cost is not just crucial; it's absolutely essential if you want your restaurant to not just survive but thrive.
Now, there's a common misconception out there that cutting food cost means you have to compromise on quality. Let me tell you that couldn't be further from the truth. Smart management of food cost can actually enhance your offerings and improve your bottom line.
First things first, let's talk about how to calculate food cost percentage. It's pretty straightforward: it's your beginning inventory plus your purchases minus your ending inventory, which gives you "use." Use is the actual dollar value of the product that's no longer on the shelves. Next, you take the use you just calculated and divide it into your gross food sales to give you your food cost percentage. At the recipe level, you take the cost of your ingredients, created with a recipe costing card, and divide that by the revenue those ingredients generate. What you get is a percentage that shows you just how much of your revenue is being spent on ingredients.
Keeping a sharp eye on your food cost and recipe cost is the first step to better profitability. By the way, if your food cost is too high, you simply won't make the money you deserve. Many restaurant tours fall into some typical traps. For example, over-purchasing can lead to waste, while under-purchasing might mean you can't serve your menu’s star items. In the kitchen, improper portion control and inconsistent preparation methods can inflate your costs dramatically. And let's not forget about menu pricing – mis-pricing dishes can eat into your margins.
So, how do we tackle these issues?
- Negotiate with your suppliers – that's a key strategy. Don't be afraid to shop around once a year for the best prime vendor agreement you can find.
- Think about adding a group purchasing organization to your toolbox. This allows you to earn on all the standard purchasing you do already.
- On the kitchen level, utilizing seasonal ingredients is another smart move. They're not only cheaper but also at their peak flavor.
- Then there is menu engineering. This involves analyzing the profitability and popularity of dishes and adjusting your menu accordingly. It's about creating a menu that both delights your customers and aligns with your financial goals. But know that the only way you can re-engineer your menu for maximum profit is having accurate, up-to-date recipe costing cards.
Remember, managing food cost isn't a "set it and forget it" task. It requires your ongoing attention and adjustment. By taking control of your food cost, you're not just saving money, you're setting your restaurant up for success.
Be sure to visit my YouTube channel for more helpful restaurant management video tips.
