By Jordan Knox
Restaurateurs may have started seeing a trend of food costs rising and profit margins shrinking, which puts an increased focus on managing the controllable costs as much as possible.
Many costs associated with owning a business are fixed: rent, utilities and to some extent, staffing. The one intangible that can make or break a business is food cost, and there are several reasons that can be attributed to profit margins walking out the door.
The most basic step of controlling food cost comes down to accurate ordering and inventory processes. Ordering correctly is crucial to a successful business, particularly when dealing with perishable products. If too much is ordered, the excessive food waste will negatively impact the bottom line. Ordering too little can have an equally detrimental effect by shorting customers and creating inconsistencies in guest experiences. Things like drought and disease that affect supply when ordering will ultimately lead to increased product costs and decreased profits if menus remain unchanged.
New menu development can be the great equalizer to maintaining food costs. In addition to providing new products for customers, it is a way to take advantage of products that have seasonally high production and therefore lower costs. By revisiting the menu every three to six months, restaurateurs have the ability to stabilize their costs and take advantage of bulk purchases through their suppliers. This is also a good time to revisit pricing and portion sizes and assess the profitability of each product. When developing new menus, each ingredient needs to check off the following boxes:
- Is the cost of the ingredient to the business stable? (Some protein and produce items have the ability to double in cost from week to week, depending on supply and demand).
- Does the ingredient appeal to a large segment of the local population?
- Can the ingredient be used in multiple applications throughout the menu?
- If the ingredient is perishable, can it be used fully by the expiration date?
- Is it the correct season to be using the ingredient?
Once the product has checked all the boxes, it is essential that the supplier can provide a case size that is appropriate to the volumes that are needed.
Portion size in most successful restaurants is scrutinized and maintained to strict specifications. Over-portioning one dish, one time may be a treat for the customer who receives it, however if that same customer comes in again with the same expectations and gets the standard portion, chances are they will feel let down. Proper specifications can help to define a recipe so that a product’s yield is maximized and waste is minimized.
Fresh perishable products are more appealing to customers for obvious reasons, so it is imperative when dealing with these products that proper stock rotation is maintained. Products that end up as dead stock or spoiled product in the cooler can be as detrimental to the bottom line as throwing money in the trash can.
In addition to products going in the trash when they are deemed to be unfit to sell to customers, restaurateurs have to be aware of staff walking out the door with these products. When staff theft is brought up, it can be a very touchy subject. The theft may even be innocent; snacking on a couple of fries out of the bowl, eating a meal that was a mistake or taking home product that is about to expire. It can also be purposeful; in the form of steaks and seafood stolen from the coolers or freezers. In most cases, restaurants that have a progressive way of dealing with staff consumption of products tend to mitigate the theft effect by clearly outlining what is acceptable and enforcing the rules in place.
By maintaining low food costs, restaurateurs are able to keep menu costs low and maintain strong customer support.
About the author
Jordan Knox works at Northland Properties and is a General Manager in training at Moxie’s in Vancouver, B.C. With over 18 years of experience in the food and beverage industry, Jordan has worked throughout North America and the Caribbean with industry-leading companies. He received his diploma in Hotel and Restaurant Management from SAIT Polytechnic in 2000 and is a lifelong student of the food and beverage industry, always looking for what new trends are emerging.