Food Cost Control for Restaurants and Hotels
This article is a shameless promotion of our new book!
Food Cost Control for Success – a practical resource for Professional Chefs
(follow this link to see on Amazon)
The focus of the book is on food cost control for restaurants of all sorts, from standalone privately owned establishments to resort hotels and corporate franchise operations.
Today’s Professional Chef must do much more than simply create and/or manage great food. With budget meetings, fluctuating food cost percentages, menu mix analysis and theories on promoting items based upon margin versus based upon food cost there is a plethora of skills which a Chef must be competent at. This book provides an in depth, detailed analysis of how to manage your food cost and bring you and your business one step closer to being successful.
Written by a Chef for Chefs, Food Cost Control for Success – a practical resource for Professional Chefs is a down & dirty, hands on practical guide for managing your food cost. While many books in the kitchen management genre deal primarily in theory, Chef Buchanan provides today’s Professional Chef with both the theory and the practical instruction needed to evaluate the complex issue of food cost and move forward with actionable solutions.
In the section on Sales Mix and Menu Analysis find out when and why a high food cost may actually be a good thing. Learn how to find and fix errors in your inventory sheets before the accounting department have posted your final inventory numbers. And gain quality insights on how to prepare for and successfully deal with your P&L meetings.
Topics covered include: the Forty Thieves of Food Cost…diving deep into food cost management; Period-end Inventory…discover basic & advanced insights on managing your period-end inventory process. Find & fix the inventory errors which most chefs and accounting departments miss; and the section on How to be a P&L Review Pro covers how to prepare for and enter your P&L meetings with confidence.
Bonus material: Besides being stuffed with practical food costing knowledge there are a few additional resources including articles on Mise en Place, BOH – FOH Communication, Murphy’s Law, links to downloadable Cleaning Schedules, Cook Training Reviews, Food Safety Forms and more.
Laced with interesting culinary photos and MEMEs and splashed with the occasional inappropriate language of the kitchen, this book is both informative and a pleasure to read.
Warning: The book is randomly spiced with bawdy kitchen language and expletives. If you find this kind of “colorful” language offensive then you will be offended with approximately 2% of the content
Food Cost Control for Restaurants – Summary of how the book can help
The following are excerpts from the book to give you a “taste” of the content and scope of the material covered.
Food cost management is essential for the professional chef to be successful. Every chef is judged on a financial basis by his/her food cost. If your food cost looks good then you are in great shape, but if your food cost is bad you could be in a heap of trouble. If you have read the 40 Thieves of Food Cost then you know that solving the problem can be very complicated as there are a host of things to evaluate in order to determine the source of the problem. The original version of this food cost problem solving tool was written in 1972 by Robert C. Petrie.
Here is an updated version of the Forty Thieves of Food Cost:
Things to Look for if you Have a Food Cost Problem
Purchasing and Food Cost Control
- Purchasing for too high a price – no bid system in place
- Buying from too few vendors – no competition for best price
- Purchasing more than is necessary
- No detailed product Specs – quality, weight, type
- No audit of invoices and payments
- No system for issuing/tracking credits
- No system for checking in deliveries
- Billed for items not received
- Invoiced weights are different than delivered weights
- Shipped items which were’t ordered
- Foods improperly stored
- No daily inspection & rotation of products
- Unorganized storage areas
- No physical inventory system
- Storage areas not secured
- Excessive trim on vegetables, seafood & meats
- No check on raw yields
- No secondary usage of trim items
- OVER production!!!
- Improper cooking method
- Cooking or holding products for too long a period of time – poor batch firing
- Not using Prep Sheets
- Not using standard recipes
- No standardized portion size
- No standardized utensils for serving
- Carelessness (waste, cold food, re-fires)
- Inadequate or poorly trained “wheelman”
Sales Mistakes which can Hurt Food Cost
- Unrecorded sales: “no charge” or cash not turned in, unauthorized comps to friends/family/regulars
- “Open food” abuses (get rid of this key if possible! Or allow only with mgr approval)
- No tracking of re-fires, waitstaff/cook errors
- No sales records to detect trends
- Poor pricing of menu items
Sales Mix & Food Cost Control for Restaurants
- Sales mix impacted food cost
- You don’t know your theoretical food cost
- Poor menu item layout
- You have a high food cost…and it’s actually a good thing! (know why)
- Counting Sheet-to-Shelf instead of the best method of Shelf-to-Sheet
- Failure to utilize discontinued menu products before they expire
- Miscalculations in your inventory program extensions:
- for example: you enter 1 case of shrimp and it calculates it as 1 pound
- zero dollar value for items in inventory
- Items are not being counted
- especially true for new products and “out of sight” products
- counting inventory by sheet to shelf method instead of shelf to sheet
- The Chef didn’t verify the General Ledger
- Charging your paper/equipment products against food cost of goods
- Transfers and credits not processed correctly
Check Your Sales Mix
When a “bad” food cost is actually a good thing… You could be doing everything correct, driving cash to the bottom line, making the business successful, have no food cost mistakes, and still have a “bad” food cost! To prove this point let’s imagine that you have… (Read the full chapter to see the analysis!)
Unfortunately very few owners, managers and chefs understand the dynamic interaction between food cost, margin and profitability
Sales Mix and it’s Effect upon Food Cost Control for Restaurants
As already stated, Sales Mix is an evaluation of your Theoretical Food Cost based upon total items sold for a given period. In other words, based upon what you sold this should be your food cost…assuming no waste, no comps, no mistakes, etc. Sales Mix calculations will also often then compare the theoretical food cost with the margin generated from the items sold. The goal is to measure and compare three vital pieces of information: your theoretical food cost % based upon items sold, the margin (net profit as compared against cost of goods), and your actual food cost after inventory is taken for the given period.
As chefs, we are often taught that food cost % is the end all, the most important evaluation of our business success. That is a misconception, a failed concept, because it is only half the truth, half the picture. Food cost control for restaurants is more complicated than that and sometimes a high food cost is good thing, perhaps even a better thing, than a low food cost. Read the section on managing your sales mix!
Restaurant Food Inventory Control
Managing your food cost is closely tied to controlling your food inventory. It starts with purchasing products which are within your budget (no foie gras at Denny’s!) and then keeping control of every aspect of that financial asset (food is an asset as far as your budget is concerned) from storage to prep to tracking yield and waste to portion size and out the door.
The following 4 chapters dive into the deep end of the period-end inventory process. A couple of things to remember:
Inventory is Your Responsibility…it will be your Crown or your Heartache
- Take an active part in every aspect of the inventory process
- Don’t trust the persons counting inventory…they will make a mistake
- Don’t trust the persons entering it into your inventory software…they will make a mistake
- Don’t trust the accounting department…they will make a mistake
- Trust no one (even yourself!)…verify everyone’s work
Controlling your month end food inventory and food cost is essential both for your business as well as for your own professional reputation. Controlling your end of period food inventory revolves around four specific tasks: Taking inventory, verifying credits & transfers, verifying the pre-closing inventory balance sheet, and checking posted inventory. Managing each step of this process is vital to being on top of your numbers.
If you want to really dig into analyzing and controlling your inventory, then this chapter will be very informative. But if you are simply cruising through, better grab a shot of whiskey (Pendleton 1910 please!) because although the content is essential, it is also tedious. Like caviar, it requires a discerning palate.
That’s a very brief introduction to the challenges of food cost control for restaurants and the content which is covered in the book, plus there is some additional content such as useful links to free downloads of prep sheets, recipe templates, baker’s recipe templates, food safety forms and more.
You can purchase the book from Amazon (available in softcover or for Kindle). If you find the book informative/helpful/useful then please leave an honest review of the book on Amazon.