Simply put, food cost is the cost of all the raw materials used in preparing a dish. Ideally, the food cost should be between 30-40% of the menu price. However, costs tend to increase owing to wastage and theft of ingredients.
A number of factors are responsible for rising restaurant food costs that lead to losses. When the cost of the raw materials rise, the yield decreases and the menu price remains constant, the food cost rises. Moreover, restaurateurs cannot compromise on the quality of the food nor they can suddenly decrease the portion size which will displease their customers. At the same time, increasing the price rates leads to dissatisfaction and loss of customers too.
To help restaurateurs strike a balance between food costs, quality, menu pricing and of course, customer satisfaction, we talked to some industry veterans to pass on the word of wisdom and their secret.
How to Manage Restaurant Food Costs, and keep them Under Control.
1. Menu Engineering
Menu Engineering is the most important part of managing food costs. A menu is not just a piece of paper with a display of dishes with prices listed on it, but the first step of selling your produce. Restaurateurs can simply use the relative pricing method to lure customers into spending more by highlighting high-profit items.
Variety alone does not constitute a good menu. A menu which lets restaurateurs utilize same ingredients in multiple dishes will help them make the utmost use of the ingredient, prevent wastage and also curtail expenses in buying different ingredients in plenty.
There is a lot of fresh produce that is not available easily all the year round, and it is important to provide dishes with fresh ingredients at the best price to the guests. In this case, updating the menu according to the seasonal dishes is a great idea to manage restaurant food costs and also to delight customers with innovative dishes and recipes.
2. Following a Standard Recipe
All the successful restaurateurs/chefs agree that following a standard recipe is the most effective method of controlling food costs. A standard recipe is the one that follows a set of instructions to prepare a particular dish, and that has been tried and tested over time.
Altering recipes more than often leads to a misbalance in the food stock, more purchase for raw materials and hence, more overall expenditure. Maintaining a standard recipe helps reduce the chances of wastage and keeps the amount of ingredient used per dish in check.
3. Correct Receiving of Raw Materials
Receiving raw materials from the market is an area where maximum discrepancies occur that lead to an imbalance in food costs. Whatever materials that are being purchased for the restaurant kitchen need to be weighed and measured to make sure that the right amount of product has been delivered.
For instance, if in 5 kgs of paneer, if only 4.5 kgs of paneer are delivered, or is consumable, then it would lead to higher food costs. The purchasing department should make sure that all the delivered products are right in amount and quality.
4. Yield Management
How much would an ingredient actually yield is important to manage the restaurant food cost. Hence, the yield must be kept in mind while purchasing each ingredient.
For example, when you purchase 5 Kg of chicken, how much of that chicken meat can actually be used must be taken into consideration. Here, you need to consider standardization of recipes and portion sizes while calculating the yield and raw material purchase.
You can also try to boost the yield for some ingredients by reusing them in several dishes and storing well for a longer span of use. For example, the aroma and flavor of condiments can be retained by infusing them in water and using that water for cooking purposes. In this way, the condiment can be used in several dishes instead of just one.
5. Storage and Wastage Control
The next step of controlling food cost is storage. The raw materials must be stored in order to increase the shelf life of raw materials and usage for a prolonged time. It is important to plan when and how much to order by keeping the shelf life of the product in mind to reduce wastage. In this case, using a POS that comes packed with the kitchen management tool aids in tracking existing stock of supplies, and setting reminders for purchasing the stock items before the stock comes to an end.
POSist’s restaurant management software is equipped with tools to manage inventory, kitchen, menu and recipe to keep an overall check on raw products, wastage as well as thefts and pilferage.
6. Reporting and Accounting
Reporting and accounting is a must for all restaurants to get an insight on items required, quantity, schedule the purchase of raw materials well ahead in advance.
In this regard, reporting tools help track raw materials purchased, foods prepared and delivered at the restaurant. Use a restaurant point of sale software that includes reporting and accounting tools that present regular data on all activities happening at a restaurant including a fresh order of raw materials, wasted items and used and unused items.
7. Analysing Your Food Costs
Before you start planning and putting things into action, you need to do a market analysis. Review similar type of your restaurants and outlets, analyze trends over the last three months and create a plan of action accordingly. You need to assess probable traffic of customers at your restaurant, order and sales to take an estimation of how much of raw supplies required. With a prior plan in place, you can manage and gain control of food costs efficiently. Forecasting based on previous trends of food consumption helps you in minimal stocking and provide only the best and freshest produce to your customers.
Do you find these seven tips for managing restaurant food costs effective? Talk to us and let us know how we can help in reducing food costs and increase the profit margin for your restaurant. Share your opinions in the comments below.