There are two myths you must bust before you can start any journey to lowering your restaurant’s food cost.
Myth number one: the price I’m paying for my products is the real problem.
One of the things I’ve learned coaching independent restaurants since 2003 is that most restaurants run seven to nine points above their ideal food cost.
Ideal food cost is what you would pay for if everything ran perfectly, portions went out perfectly, there was no waste, no theft and no spoilage. If you ran a perfect restaurant, based on what your customers order, you would hit your ideal food cost. But the average is just that — a number somewhere in the middle of all restaurants combined. If you run a pizzeria, you might have a 24-per-cent ideal food cost. A steakhouse could have a 35-per-cent ideal food cost.
Just using those two numbers as an example, imagine most restaurants are running seven to nine points above that. Why? Because they’re making mistakes in the kitchen. It’s not the price you’re paying for your products. It’s not because of outside factors. It’s coming from the inside.
So how do you deal with this? How do you stop making those mistakes? Here is a short list of items you can put in place to help you gain some savings on food cost.
- Key Item Tracker: tracks five to 15 items on a shift-by-shift basis to make sure they’re not stolen. This refers to high-protein items, high movers, things that are important to you, things you don’t want stolen.
- Waste Tracker: tracks what you’re throwing away, such as that half a case of tomatoes every Thursday because you’re over-ordering on Monday. Or perhaps a cook is burning steaks and needs to be re-trained.
- Restaurant Checkbook Guardian: give up ordering without giving up your checkbook. Allow your managers to place orders within a budget. And then they can’t go over budget without asking you for permission.
- Portion Controls: make sure every dish goes out the same way every single time, which controls costs and helps with sales because you give your guests the same experience every single time.
- Line Checklists: make sure everything is in the right place, that you have the right portion controls, so everything tastes right.
- Time-temp Checklists: check the temperatures of your coolers on a regular basis so you’re not throwing away product because it’s going bad.
Myth number two: you’re supposed to operate based on an industry-average food-cost target.
There’s an assumption that food cost can, or should be, generally at 34 per cent. To understand why that average is probably not your restaurant’s target food cost, you have to understand prime cost, budgets, ideal food cost and menu engineering.
Prime cost is total cost of goods sold, plus total labour costs, including taxes, benefits and insurance. I teach restaurant owners to shoot for a 55-per-cent prime cost — not the national average of 65 per cent — and that you can run a higher food cost, lower labour cost, or a higher labour cost with a lower food cost. It doesn’t matter how you get to those 55 points.
Using a budget allows you to set your plan in progress for how you’re going to lower your food cost. For example, you can put the Key Item Tracker, Waste Tracker and the Restaurant Checkbook Guardian in place to reduce your food cost by three points right out of the gate. You do need to train everyone one month and then hold them accountable the next, because it’s not a post-it-and-forget-it set of systems.
Now that we’ve busted these two harmful myths, you can create a plan and use this short list of systems to be on your way to a profitable restaurant.
David Scott Peters is an author, restaurant coach and speaker who teaches restaurant operators how to take control of their businesses and finally realize their full potential. Get his three principles to restaurant success at https://dsp.coach/three-key-principles.