April 23, 2021
Food Cost Control – 4 Successful Tools
The restaurant business is tough, especially when it comes to managing costs. If you are a chef, restaurateur, or food service manager then you know that food cost control is essential in order 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 then you could be in a heap of trouble.
But how do you manage it? Food cost control can be difficult to keep up on, especially when you already have so many other things on your plate. It requires constant monitoring and adjusting. A food cost problem could be the result of over portioning, incorrect recipes and/or costing, excessive waste, a bad inventory process, an accounting error, a misunderstood sales mix, or so many other variables.
The most important thing for you to know is that there’s no one-size-fits-all solution. You need to be able to customize your approach based on your specific needs and circumstances. Fortunately, Chefs Resources has the articles, video tutorials, and chef-friendly Excel tools that can help make this process easier.
Here are 4 helpful tools available on Chefs Resources to help you find and resolve food cost problems.
1. The 40 Thieves of Food Cost
If you have read the 40 Thieves of Food Cost then you know that solving the problem can be very complicated because there are so many possible areas where food cost can go bad, many more “possibilities for error” than many chefs or managers even realize.
The forty thieves is a step-by-step process that will help you identify the root cause of a high food cost, or a fluctuation in food cost. It’s a tried and true method for analyzing the many variables that go into figuring out why your food cost is too high. You don’t have to be an expert in accounting or finance to use this guide, although it is lengthy it is easy enough for anyone who has ever run a restaurant before.
Use the 40 Thieves to identify the specific issues you need to focus on, and at the same time gain a better perspective on the areas of food cost control that you & your team already excel at. And also use it to impress upon the staff the importance of managing all aspects of the restaurant.
2. Accurate Recipe Templates
There are many different programs for recipe templates out there. However, as a chef I prefer using Excel because it is such a powerful program to use and you can not only write the recipe but also cost them out too. Another benefit of using Excel is that you can put multiple recipes in each workbook, so you can have all the recipes of a feature dish including the starch, a special vegetable preparation, the sauce and so on in separate tabs all in one Excel workbook (seem image below).
Whether you’re a small family-owned business or the owner of an international restaurant chain, calculating your recipe cost is essential to the profitability and survival of your restaurant. When calculating your plate cost, you want to be sure that you include every food item which goes into it (duh! But people often forget things…) Items which tend to be overlooked are the incidentals such as the free bread & butter, the ketchup, the fryer oil for French fries, a side dish included with an entrée, or the chocolate you give each guest with the bill. These are items served with each meal but they’re not charged for, yet you need to figure them into your food cost.
Items such as rolls & butter are often included in the recipes for all entrees, thus accounting for the cost of them. Ketchup may be worked into the recipe cost for a burger, or perhaps into the recipe cost for French fries. The cost of fryer oil can be worked into the cost of all fried foods, or perhaps evenly distributed to all entrees, especially if the guest has a choice of sides which may include a fried food option.
Another commonly overlooked aspect of recipe costing is yield percentages. Do you really believe that you will always get 100% yield from your mayo bucket, your salad dressings, your #10 can products? Is the crew really going to use a rubber spatula to get 100% yield? Doubtful.
And what about vegetable yields? If your recipe calls for 8 oz of onion is the cost of the discarded root and skin factored in? This is known as AP (As Purchased) cost -vs- EP (Edible Portion) cost. Apply this to all your vegetables, beef, chicken, seafood, etc. If you trim these items and have loss due to the trim then that yield percentage should be worked into your recipes otherwise they will always calculate a cost which is lower than your actual cost, and therefore your actual food cost percentage at month end (period end) will always be higher than you expect. Check-out our plate cost template to help get more accurate recipe costings!
3. Correct Inventory Taking Method & Verifying Closing Inventory
Inventory management is one of the most important components of managing your food cost. Controlling your month end food inventory and food cost is essential both for your business as well as for your own professional reputation. It is amazing how many managers & Chefs don’t know the value of shelf-to-sheet counting -vs- sheet-to-shelf counting and how this one technique can be responsible for major shifts in food cost.
Don’t just give your inventory to the accounting department and trust that they will do things correctly! I find errors in accounting software and/or methodology every month. Very the numbers, cost extensions and process before and after final closing.
Controlling your end of month food inventory revolves around four specific tasks: correctly taking inventory, verifying credits & transfers, verifying the pre-closing process, and reconciling discrepancies. This series of articles will go over each step in detail so that you can be confident in knowing what needs to be done when it comes time to close out the month.
4. Know Your Sales Mix!
If you’re not measuring your sales mix, you’re missing out on a key metric that can help you understand how profitable your business is.
Sales Mix is an important part of the restaurant industry and understanding it will allow for better decision-making in all aspects of your menu and running a successful restaurant. It’s also essential to know what percentage of your revenue comes from each dish & category (appetizers, entrees, etc.) so that you can make informed decisions about pricing, marketing, menu development and more. This will allow you to make more informed decisions about pricing and product selection in order to maximize profits.
Sales Mix is an evaluation of your Theoretical Food Cost based upon total items sold for a given period. Based upon what you sold this should be your food cost…assuming no waste, no comps, no mistakes, etc. Sales Mix calculations also often compare the theoretical food cost with actual food cost, as well as the margin generated from the items sold.
Tracking & understanding the relationship between Theoretical Food Cost, Actual Food Cost, and Margin gives you a significant advantage when it comes to evaluating restaurant health and swings in Actual Food Cost from period to period. Read more about Sales Mix to understand why a “bad” food cost is not always a bad thing!
Follow this link to check-out all our food cost spreadsheets!