Food Cost Control for Restaurants - Part 1

Restaurant Food Cost Control Procedures

Image courtesy Tulalip Resort. Image licensing info

Food cost control is a complicated beast and yet it is one of the key criteria used to evaluate the success or failure of a chef or restaurant manager. The formula for determining if you have a good or bad (as defined by your budget) food cost percentage is relatively easy. But the vast area of possible reasons for your food cost to be off makes finding a solution very complicated and more an exercise in the process of elimination rather than a simple “aha!” moment.

A few years ago we examined the complexity of food cost control in our article “The Forty Thieves of Food Cost.” Today we are rehashing that topic and have included it in our Whiteboard Chef Management series.

Food cost control can be broken down into 9 primary areas which you need to manage effectively, and then each of those 9 areas have specific areas or tasks which need to be controlled in order to be success.

The 9 primary areas of food cost control are:

Purchasing Procedures
Receiving Department Procedures
Storage Procedures
Prep Standards
Production Standards
Service Period Challenges
Sales Procedure Errors/Abuses
Inventory Procedures
Accounting Department Challenges

Each of these major areas have a long list of items which need to be dialed in. Read the explanation below, or watch the video.

Let’s dive into the 40 thieves of food cost control areas in which you can build better systems to control your food cost percentage.

Purchasing Procedures
- Too Few Vendor = No Competition
  If you are only buying from just one or two vendors then you’re not getting a lot of competition. Now I know that if you are in a large operation you’ll probably have an exclusive contract with a broadline company like Sysco or FSA and you have to buy 70 or 80 percent of your product from them. But that still leaves the other 20 or 30 percent open for bids. You should have at least 2 or 3 vendors for each category of product (meats, fish, produce, etc) that you purchase so that there’s some competition. Otherwise if you only have one vendor they’re going to sell it to you at whatever price they want to.
- No Bid System
  No bid system kind of goes back to having competition. On a weekly basis your expensive products or your high use products (again meats, fish, produce) should be sent out for bids so that you get a bid from at least two different vendors on what the price is going to be this week. That way you always have the best bid and the best price.
- Over Purchasing
  That goes without explanation. If you’ve got too much product then you’ve got to sell it cheaper in order to get it off your hands or you end up losing it.
- No Audit of Invoices and Payments
  Most companies are going to have an accountant who will go through and confirm purchases & credits. If you don’t then that’s definitely an area that you could be losing some money because you have no verification payments & credits.
Receiving Department Procedures
- Theft
  The receiving department is an area that can steal. Let’s say you get 20 pounds of salmon and they put 15 pounds into your kitchen and 5 pounds into their car. You need a way to verify that and hold them accountable.
- No Tracking of Credits
  You need a system to track credits. Let’s say that the truck driver gets there and something wasn’t on the truck, how do you keep track of that credit? Or you’re supposed to get 25 pounds according to the invoice but they only delivered 20 pounds. Or you rejected a product and sent it back. Your Receiving Department needs to have a way to keep track of that information so it can be balanced out at the end of the month.
- No Check-in Process
  If your delivery guy just gets there and drops off a pallet, has you sign and he leaves then you’re trusting him way too much! Every single thing on the truck needs to be checked in and verified that it is actually on the invoice and in your possession. Additionally you should also have a sheet of what exactly you ordered so your receiving guys can compare that against what you are receiving. There have been times where I’ve seen sales people send 30 pounds of something when I’ve only ordered 20 pounds. Or maybe they’ll send you something that’s a more expensive spec. Your receiving guys need to be confirming that what you are receiving is the same thing that you ordered.
- Perishables Left out too Long
  Your receiving guys should know enough to put all of your cooler products away first and then do your dry storage items storage items.
Storage Procedures
- Foods Improperly Stored
  There’s a number of ways that this can happen. Shellfish left in ice that then melts and they die, or packages stacked on top of each other which crush what’s on the bottom. It could be your fresh produce being put into the dry storage or fresh fish being put in your freezer. Follow up with your staff to be sure they are properly trained.
- No Daily Inspection or Rotation (no FIFO)
  On a daily basis you or someone on your team needs to be inspecting all the product in your fresh coolers making sure that it’s still in good shape, that it’s being properly stored, and that your crew properly rotates product.
- No Record of Transfers
  If you’re a standalone restaurant this won’t matter, but if you have 2 or more restaurants, or maybe a restaurant and banquets, or you have an employee cafeteria and product is moved from one to the other then keeping track of transfers is vital to your food cost control practices. Tracking transfers allows you to accurately know the food costs for each one of your venues and keep track of the billing to each one as you move product around.
- Storage Areas not Secured
  What happens when you go home at night? Do you have a protocol in place when you’re not there so that someone is in charge of maintaining your storerooms? And how about after all the kitchen is gone? Does all of your product get locked up…your dry storage, your freezer and so on.
- Unorganized Storage Areas
  This kind of goes back to FIFO and is a major part of food cost control. Too often I’ve seen prep cooks and line cooks store same products in different areas or on different shelves in the same cooler. All same foods should always be next to each other, or in front/behind each other, with oldest product closest to the door so that it’s easy to find same product and to make sure that it’s properly rotated.
Preparation Procedures
- Excessive Trim
  Often there is excessive trim on vegetables, meats, and seafood. You need to have a spec on what yield percentage you expect out of each product and train the crew how to do it properly. For instance, how about on a bell pepper or an onion? How much trim is cut off of that and are you using some of that trim for a secondary procedure (stock, minced veggies, etc). People who aren’t properly trained are just going do whatever it is easiest so you need to train them properly.
- No Check on Raw Yields
  Just because you’ve told them doesn’t mean they’re going do it! We all know this. You need to follow up on a regular basis to make sure that the instruction you’ve given are the instruction that they are actually doing.
- No Secondary Use of Trim
  This is especially true for meats and seafood scraps. You need to have a secondary use say for your beef trim for burgers or some type of a stir-fry and so on.
Production Procedures
- OVERPRODUCTION!!
  Same as ordering, if you over produce food chances are you’re going to lose it. A typical way that this happens is you got a cook coming in who’s working the same station for the next five days. Rather than prepping some each day maybe he decides that he’s going to prep enough of an item for the next five days so he doesn’t have to do it again. And then on day four it’s spoiling or it doesn’t look good and you tell him to throw it out. Or he’s got way too much and on day 4 you’re throwing out a ton of food because over prep has been done.
- Incorrect Cooking Temperatures or Processes
  A great example of this is cooking prime rib and how it can influence your food cost control endeavors. If you throw your prime rib into a 350 degree oven on high fan and just cook it the whole way you’re going to get a lot more shrinkage than if you were to use an Alto-Shaam. You might get at least 10% more yield out of an altar sham and 10% is a lot of prime rib! This is one of the easiest ways to improve your food cost control endeavors.
- Holding Food for Too Long
  This is essentially poor batch cooking. If you are in ala carte restaurant and you cook everything to order then this isn’t going to apply to you. But even if you cook food ahead for the next 15 minutes on some vegetables or starches then you need to be controlling that. Controlling batch cooking is especially true for cafeterias, buffets, and banquets. Having enough food to get through the peak of service is essential, but then that transition time from busy to slow is where things fall apart. The cooks keep producing because they’re used to being on the high or on the peak, and now all of a sudden people stop eating and you have a lot of extra food.
- No Prep Sheets or Production Sheets
  If you don’t have prep sheets first the guys may forget about something and then you’re kind of screwed when you get to service. Or they’re going to over produce and do whatever they think is right. You should be setting pars on the production sheets or the prep sheets for them and ideally it’ll be pars for slow days and pars for busy days.
- No Standardized Recipes
  Not following recipes, or worse yet having no recipes. I know pretty much every restaurant has recipes, the question is does the crew follow them or do they make up their own variations? Often cooks will think that a little bit more of this or a little bit more of that or maybe an extra shrimp makes the dish better or won’t matter. Make sure that you’ve got good written recipes that are accurate and checked out every six months and also verify that the crew is following the recipes.

Stay tuned for Part 2! We’ll look at the other 4 areas of food cost control: Service Period Challenges, Sales Procedure Errors/Abuses, Inventory Procedures, and Accounting Department Challenges.

Additional Reading: 8 things to help manage food costs