Do you spend each month baffled at how much you are spending on food for your restaurant or do you have more food waste than you’d like each month?
Food cost relates to how much a restaurant spends on ingredients versus the actual restaurant menu price and revenue you take in. Calculating your food costs is an easy equation: Divide your net food purchases by net food sales, which brings you to your cost of food.
For fine dining restaurants, the average food costs should be no more than 30% of your bottom line.
Are your food costs higher than 30%?… These 5 Tips Can Help
So what if your percentage is higher than 30%? The secret lies in maintaining a well-organized, efficient kitchen, with all staff committed to keeping costs and waste low. Here are a few quick tips to keep your food cost percentage in check:
1. Use up what you have and order as needed
Are you consistently ordering multiples of the same product but only using it a few times per week? You could drop your costs by keeping on top of the frequency of use and using up what you have in the dry pantry.
2. Use seasonal foods when possible
Often seasonal foods are less expensive because of their abundance during their harvest season– think pumpkin, zucchini, and so many more! Maximizing on these opportunities will not only help you keep your cost in check, but also provides an opportunity to possibly work with local suppliers and offer seasonal menu items.
3. Make menu changes to increase profits
Are there dishes that guests order infrequently and/or take up a large portion of your food costs? Reworking the menu a bit could help the chef capitalize on what’s available and drop dishes which aren’t as popular, and maybe introduce them as weekly specials instead. Using Upserve HQ restaurant management software, Press Bistro reviewed menu items that were underperforming, and updated them to be top sellers, resulting in a 30% increase in sales.
4. Maximize each ingredient and product
Are you using your ingredients to their full extent? Could food scraps like veggie peelings be used in other ways, like many stock?
5. Don’t rely on one vendor
While shopping around for best prices can be a time-consuming business, it’s important to know what the competitive prices are for products, as well as what fees and charges are built into your final bill. Some vendors may charge freight or delivery fees that other vendors may waive if you bulk purchase items from them. All of these bill amounts affect the bottom line of food cost.
Dealing with keeping food cost down is something all restaurant owners must assess routinely in order to run an effective and profitable establishment.
It’s not cheap to run a restaurant. Food costs are the number one line item that takes up most of the budget, and prices have jumped 5 percent in the last year, and almost 25 percent in the last five years.
Food can account for 35% of expenses.
Find out if you're spending too much with our Food Cost Calculator.
Don’t know your ideal food costs? Use our food cost calculator for a personalized recommendation!
Here are 3 Things Are Eating Up Your Food Costs
Saving every dollar you can on food costs can’t be an afterthought. It’s a necessity if you want to keep your restaurant’s doors open. But how to make significant changes that don’t take up more of your already-packed week as an independent operator?
There are three ways you can reduce food costs at your restaurant without eating up too much time or making running your restaurant harder.
1 – Losing track of ingredient and category prices from week to week
Spring of 2015 rolled around and the cost of one of the most common ingredients on almost every restaurant’s menu spiked drastically. The word got out quickly about the Avian Flu epidemic hitting the United States and everyone felt the pain of the increased price of eggs right away.
But sometimes changes in the prices of items or entire categories go unnoticed. This is either because the increase escalates in small amounts over a longer period of time or because independent operators aren’t looking for it.
Understanding what you’re paying for items you order the most of from week to week is one way to reduce food costs at your restaurant. You can do this by keeping a simple Excel spreadsheet or using an automated reporting tool.
2- Letting rebates and credits fall to the wayside
Every restaurant operator has experienced a supplier dropping off items that can’t be used either because they’ve gone bad or they’re the wrong item, e.g. arugula vs. kale.
The supplier verbally gives you a credit for these items on the next shipment; however, neither the supplier nor you track this credit. It doesn’t stay top-of-mind, so it never gets used. You could save hundreds of dollars a month just by making good on those credits.
The same can be said for rebates. But again, neither the supplier nor you have any convenient or trustworthy way of tracking these rebates, so they fall through the cracks. You most likely qualify for a rebate of $100 to over $1,000 in a six-month period. Cash in on them!
3 – Not taking advantage of supplier discounts
Perhaps one of the most underused ways to save money on food costs is to ask for discounts from suppliers. Most broadliners will offer a good deal on the ingredients you purchase in bulk from them regularly. You can then use these discounts to price your menu more effectively, and understand your monthly budget accurately.
Not only do you lock in a low price for the foods you order the most of and save money, the supplier earns your loyalty and trust. It’s a win-win situation for everyone involved.
Stop Giving Away Your Hard-Earned Money
The most obvious way to increase profits at your restaurant is to drive more customers to your establishment. A not-so-apparent way to do the same thing is to save money on your food costs. You may not pull in the same amount of extra money as you would from serving hundreds of additional customers, but you will be able to reinvest your saved money into your business.
After all, “A penny saved is a penny earned.”
Looking for more? Use our food cost calculator to get a personalized recommendation!