5 Tips for Restaurant Food Cost Control

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Food costs are one of the biggest operating expenses of a restaurant. Wholesale foods are often perishable, which makes this even more challenging to manage. While you can try and ease the pain of food costs by raising your prices and working with fewer staff members, these are short-term solutions that can influence the level of service your restaurant is able to offer. This, in turn, affects your restaurant’s reviews, which translates into fewer customers and lower profitability.

If you’re struggling with restaurant food costs, you’re not alone. This is an issue with the majority of those who open a restaurant.

If you want your restaurant to become successful, you ultimately need to learn to effectively manage these costs. Here are 5 ways you can do that.

  1. Forecast your sales

Forecasting sales is an important part of managing the food costs in any restaurant. If you’re going to know what your food costs are expected to be over the next year, you need to have an idea of what your sales will be. This doesn’t just help you manage your food costs, either. Forecasting can also help with things like employee scheduling, ordering, and food prep.

Fortunately, forecasting your sales isn’t a complicated task. You simply need to look at your past sales data and use that to make projections for the period you’re forecasting.

However, creating an accurate forecast requires more than just a quick glance. Taking a look at recent sales data may lead you to believe you need more or less than you actually do. Look for stand out events that may have caused spikes or slumps in sales. If there was recently a huge sporting event that led to a spike in restaurant deliveries, that may have contributed to abnormal sales patterns. Additionally, keep future events in mind to forecast for potential changes in sales.

  • Redesign your menu

An effective way to manage your food costs is to redesign your menu with food cost control in mind.

Essentially, you want to eliminate items that are too costly or that aren’t popular enough for you to be able to order the ingredients at discounted quantities. These items are sending your food costs up without contributing a significant amount of profit.

It’s also important to showcase your most profitable items. You can do this by labeling them as featured, most popular, making the text bigger, or having photos. Featuring the most popular item on the cover of your menu can increase your margins as well.

If your food costs are too high (meaning they’re above 30% of your sales for a particular dish), then you’ll want to consider raising your menu prices. Do this gradually, however, so that you don’t shock your regular customers with a significant price increase. A few cents every few weeks is a good way to do this.

  • Train your staff with food costs in mind

When you hire on a new member of your team, you want to make sure they contribute to keeping your food costs low. This is accomplished through training.

If you run a quick-service restaurant, make sure your cashiers are properly trained and equipped to answer questions and operate your POS system.

Additionally, train the cooks and line workers on portion control and make sure they follow the recipe. There’s lots of software available that can help you attribute performance to a particular employee. This way, you can approach the ones that are giving irregular portion sizes.

Finally, make sure your employees understand how the restaurant’s profitability contributes to their paycheck. Explain that if the restaurant doesn’t make money, you won’t be able to keep them employed.

  • Manage your inventory

Inventory management is key in controlling your food costs. Inventory is basically just money on the shelf, and if it’s lost or stolen, this can hurt your bottom line.

Here are some things you can do to improve your restaurant’s inventory management:

  • Change inventory responsibility every few weeks. This keeps your staff accountable.
  • Implement a First-In, First-Out (FIFO) system. This will ensure that the food is always at its most fresh when served and will prevent waste.
  • Keep your shelves well organized.
  • Measure your inventory levels in dollar amounts. This way, you can check to make sure that your beginning and ending inventory dollars are close to the same each period.
  • Know how to calculate your food cost percentage

Restaurant food costs are always calculated using something called the food cost percentage, and are calculated using the food cost percentage formula. This formula helps you determine the difference between the revenue each dish is generating versus how much it costs to make that particular dish.

Ideally, you want your food cost percentage to be under 30%.

If you’ve never heard of the food cost percentage, don’t worry, this infographic will help you with your calculations: