A Collection of the Best Tips for Cutting Restaurant Food Cost

 For this special episode, I’m sharing some of the best tips from previous episodes, focusing on key areas such as food cost systems, leadership, and labor cost. Today’s episode is dedicated to food cost. We’ll explore how high food costs are often self-inflicted, provide a quick walkthrough on calculating food cost, delve into the concept of ideal food cost, and finish with some menu engineering basics. Whether you're a new listener or a long-time follower, this episode is packed with valuable insights. Let’s get started!

The reality of food cost from episode 64

What if I told you that while rising food prices do impact your bottom line, the majority of high food costs are self-inflicted? Most restaurants operate 7 to 9 points above their ideal food cost. By utilizing accurate recipe costing cards and analyzing product mix from your POS system, you can determine your ideal food cost. This figure isn’t a national average but specific to your restaurant’s operations and menu. For instance, a pasta place might have a lower ideal food cost compared to a steakhouse.

Common causes of high food cost:

1. Over-portioning: A consistent problem where extra product is used unnecessarily, inflating costs.
2. Waste and Spoilage: Over-ordering and improper storage lead to waste, significantly impacting food costs.
3. Theft: Both internal and external theft can drain your resources without you realizing it.
4. Owner Usage: Taking products for personal use without accounting for them skews the food cost figures.

Understanding Food Cost Calculation from ep 64

To manage food costs effectively, you need to understand the basic formula:

• Beginning Inventory + Purchases - Ending Inventory = Usage
• Usage ÷ Sales = Food Cost Percentage

Any increase in usage—whether from waste, over-portioning, or theft—will raise your food cost percentage.

Implementing systems to control food cost from ep 64

The lack of systems and leadership in the kitchen are primary reasons for high food costs. Implementing and managing the following systems can significantly reduce these costs:

1. Key Item Tracker: Count crucial items every shift to prevent theft.
2. Waste Tracker: Record all waste to identify and address recurring issues proactively.
3. Purchase Allotment System: Give managers a budget based on actual needs and forecasted sales to avoid over-ordering.

These systems, combined with leadership that ensures accountability, can guarantee a 2-3 point drop in food cost.

Menu engineering basics from ep 47

Menu layout and pricing

Understanding menu layout and pricing can also help manage food costs:

1. Menu structure:
• Single Panel: Items at the top sell more.
• Two Panel: Upper left to mid-right items sell more.
• Three Panel: Center and upper right items get the most attention.
2. Descriptive copy: Avoid grocery list descriptions. Use enticing language to make items more appealing.
3. Readable fonts: Use no more than three fonts, and ensure they are readable without the need for reading glasses.
4. Avoid price lists: Don’t align prices in a way that encourages guests to choose based on cost alone.

Price flexibility

Use odd-cent pricing, e.g., $12.75 instead of $12.99, to make price increases less noticeable and to maintain flexibility in pricing adjustments.

White space and visuals

Maintain 50% white space on the menu to avoid clutter. Highlight items with boxes or pictures to draw attention and increase sales.

Final thoughts

Running a restaurant comes with its challenges, but by combining leadership, systems, training, and accountability, you can achieve the financial freedom you deserve. Implementing the right food cost controls and menu engineering strategies are crucial steps towards a more prosperous restaurant.

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