There are many variables that play into your bottom line. From unchanging costs like rent to fluctuating costs like utilities, restaurant owners and accountants have their hands full when navigating the financial pitfalls that can turn a profit into a sinkhole. Food cost is one of these fluctuating but somewhat controllable costs that can impact your menu and your profits. Indeed, getting a grip on food cost in your restaurant can help to increase your margin of profit, ensuring that your taking home more money for every plate you create. What exactly is food cost? Food cost is defined as the percentage of total restaurant sales spent on ingredients and food products. The percentage should hover between 33% and 39% and must be accurately tracked in order to calculate total net profit. Even if you were to purchase the same ingredients and same foods for the same menu items on a regular basis, you’ll likely see the food cost amount fluctuate with each purchase. There are many reasons why food cost may change over time:
Droughts affecting produce
High demand on items
And there are a multitude of other reasons why your food costs may continue to change before you even have the chance to alter what you’re doing to compensate. Food cost can be difficult to control because items are perishable, and you may end up with too many items in your inventory if your order too much at a time. One can also see their food cost totals fluctuate not because of the purchasing price of the food itself, but because of other reasons:
Over and Under Purchasing
Receiving Errors (incorrect weights, pricing errors, etc)
Storage Problems (theft, accidents, spillage, spoilage, etc)
Preparation Errors (improperly cooked items, incorrect portioning, etc)
Serving Issues (wrong orders, returned orders, etc)
While you can’t control the initial cost of food items, you CAN control other aspects of food cost that deal with human errors as mentioned above. Train your employees properly on how to cook items, and train them to care about the products. Record food products, and rotate items in storage to reduce the likelihood of spoilage.
Invest in portion control equipment to ensure that you’re portioning foods appropriately for any given menu creation. Consistency in the kitchen ensures both food safety and profitability. Portion control plays a huge role in the expenses of creating a menu item versus the profits acquired in said item, and assigning appropriate portion prices determines how much potential for profit your restaurant has! Portion cost is what the restaurant must pay for any given item including ingredients, equipment, labor, and time costs. Offsetting these costs by assigning prices appropriately can not only be profitable, but it can leave guests satisfied and coming back for more.
E Friedman Associates