With margins slim and competition fierce, restaurants need to keep their operating expenses under control to remain in business. A profitable restaurant typically has food costs between 28 and 35 percent, making food one of the biggest expenses.
Restaurants that succeed in improving their food costs without immediately resorting to band-aid strategies like raising their menu prices or trying to work with less staff gain a tremendous competitive advantage. Here are 10 tips to help you effectively control restaurant food costs without sacrificing food quality.
1. Minimize Waste
Even though more than 37 million people struggle with hunger in the United States alone, 30 to 40 percent of all food produced is wasted, according to the United States Department of Agriculture, and the restaurant industry is far from innocent. In fact, it’s one of the biggest contributors to the current food waste problem.
Restaurants already have a strong incentive to minimize waste: improving their food costs. There are many effective, easy-to-implement approaches that can greatly reduce the amount of food that ends up in a dumpster, including better food storage, portion control, staff training, and smarter shopping. In general, minimizing food waste typically requires a large number of smaller optimizations instead of one large change.
2. Keep Track of Your Inventory
Busy with other tasks and responsibilities, restaurant owners and managers don’t always reconcile inventory as often as they should. However, it’s impossible to know how and at what rate your food is being used or wasted without consistently keeping track of inventory and ensuring that stock levels are in line with sales projections.
It’s a good idea to implement a First-In, First-Out (FIFO) system to ensure that the first food items purchased are also the first used. FIFO helps preserve the freshness of quickly perishable goods such as butter, milk, fruit, and fish, which is why it’s the most used inventory management system in the restaurant industry.
3. Think Before Ordering
Even a slow day at a busy restaurant can be hectic, requiring many decisions to be made on the spot without much thinking, but ordering shouldn’t be one of them. Ordering the right quantities of the right items at the right time is key to controlling food costs, which is why it always pays off to think before ordering.
Keeping track of your inventory ensures that you’ll always have the information you need to know exactly what to order and when, but there is more that you can do to control food costs when ordering. Buying in bulk can make a world of difference as long as you have enough space to store everything. If your restaurant relies on food items from overseas, consider making a smaller number of larger orders to save on shipping costs.
4. Invest in a Modern Point-of-Sale System
Legacy point-of-sale systems have no place in the restaurant industry anymore. Typically based around a central kiosk, such systems are inconvenient, lack features, and their maintenance is costly and time-consuming.
A modern restaurant point-of-sale system such as Lavu helps efficiently control restaurant food costs by providing live inventory updates on your tablets as you go about your daily operations while seamlessly incorporating your business workflows. Other noteworthy features of a modern restaurant point-of-sale system include remote access to sales data, aggregated reports, and customizable dashboards.
5. Make It Seasonal
Seasonal flavors are not only more affordable, they are also highly desired and capable of creating an emotional connection with consumers.
“Seasonal food and drink ingredients present a welcome opportunity for consumers to extend that special holiday feeling or escape the dreary winter days for sunny summer flavors,” said Mintel, a privately owned, London-based market research company. According to the company, 27 percent of Americans consider seasonal flavors to be nostalgic, and 78 percent consider seasonal dishes to be a treat.
By tweaking your menu according to seasons and using locally sourced ingredients, you can create contemporary spins on various cuisines and hold down purchasing costs at the same time. Your bottom line will look a lot greener, and your customers more satisfied.
6. Optimize Your Portions
Some restaurants pride themselves on serving huge portions that are nearly impossible to finish. Such restaurants don’t care how much food ends up thrown away because they consider their portions to be an effective word-to-mouth marketing strategy, and they’re right. For all other restaurants, optimizing food portions is an excellent way to reduce waste.
To know how much food to plate, you need to monitor how much food ends up left on the plate. When you discover which dishes customers consistently don’t finish, you need to train your staff to portion proteins at the proper weight. Even a small weight difference can be significant enough when it comes to meeting your food cost target.
7. Recalculate Food Costs
Just because your menu items were profitable when you first opened your restaurant doesn’t mean they still are. By regularly recalculating your food costs, you can keep your pricing profitable and deal with fluctuating ingredient costs in a timely manner.
First, you need to break up each menu item into its individual ingredients and figure out your cost per meal served. Then, calculate what percentage of your menu price comes from food. An ideal food cost should be between 15 and 30 percent. Never let fondness for certain menu items make you act irrationally. If you can’t serve your favorite recipe at a profit, it might be better not to serve it at all.
8. Start Serving Daily Specials
Customers always enjoy a tasty plate of food at a delicious price, but the real reason why every restaurant should start serving daily specials is that they can be an extremely effective tool for reducing waste and controlling restaurant food costs. With daily specials, you can easily put food that has been sitting in your pantry for a while to good use by incorporating it into a recipe and adding that recipe to your list of daily specials.
Over time, you will get regular customers who always look forward to your daily specials, which will allow you to experiment more and purchase ingredients you wouldn’t otherwise be willing to stock up, fearing it would go waste.
9. Listen to Your Employees
You may not realize it, but your employees are most likely experts when it comes to detecting waste and coming up with clever ideas on how to minimize it because they handle, prep, cook, and serve your inventory on a daily basis.
Get your staff together from time to time and encourage them to share their thoughts and ideas. A short brainstorming session will most likely not only produce many great cost-saving ideas, but it will also boost team morale and make everyone feel appreciated and listened to. Study after study prove that employees who feel appreciated and valued at work perform better and prove more productive.
10. Get Your Forecasts Right
Running a successful restaurant is all about planning and using all the information you have at your disposal to prepare for upcoming days and weeks. To get your forecasts right every time, you need control of your inventory, sales, and all other aspects of your restaurant business, which is where a restaurant POS system comes in, helping you spot sales trends and adjust your orders accordingly so that you can always effectively control your food costs.