Dealing With High Food Costs at Your Restaurant

One of the biggest issues that restaurants encounter is problems around food cost. There are many possible situations that can cause food cost to rise. Some are external factors, like the general cost of buying ingredients.

Others may be internal, such as waste in the restaurant kitchen or employee theft. Shrinking profits may be a sign that your food cost is out of line. Below are eight possible problems that can cause food cost to rise and suggestions for ways to cope with increased food cost at your restaurant.

Not Mixing Low and High-Cost Ingredients on the Menu

In order to keep your menu profitable, you must maintain a balance of traditionally low-cost foods such as pasta or potatoes with higher food cost items like seafood or prime cuts of beef. Remember, your food cost should be around 30-35 percent.

This means that if you pay $1.00 for something, you need to charge a minimum of $3.34. It may seem like you are charging a lot more than necessary, but keep in mind that you aren't just paying for the food itself. You are paying someone to prepare the food, serve the food, and clean up after the food. Everything in your restaurant, from payroll to the electric bill needs to be covered by the food you serve. 

Employee Theft

As unpleasant as it is to think about, you must be aware that employee theft does happen. Having a system in place to track food from the time it is delivered to your restaurant from the supplier to the time it is sold to the customer, can deter employers from helping themselves to goods in the walk-in or freezer.

Making sure that the front of the house guest checks reconcile with the kitchen tallies (easy if you have a POS system) will help curb staff from eating the profits. Offering staff a low food cost “freebies” menu during their shift is another way to deter them from eating higher food cost items. 

Not Using Consistent Portion Control

One of the reasons that franchise chain restaurants are so successful is because they have menu portions under control. Whether you go into an Applebee’s in New York or Montana, you’ll be served the same food in the same portion sizes. Customers like that predictability.

And by streamlining their portion sizes, chain restaurants ensure healthy profit margins. Even if you own a small, independent restaurant, portion control is still an important factor in keeping your business profitable. Portions are controlled with the correct sized serving utensils, calibrated food scales, and consistent storage sizes.

Wasting Food

Waste not, want not. Utilizing as much food as possible can increase your profits and decrease food cost. Beef trimmings from tenderloin can be repurposed into satay beef tips, which can then be sold as a moderate entrée special. Chicken bones, vegetable scraps, which might have been thrown out, can make a delicious stock. A well-trained chef will know how to use all parts of an ingredient with minimal waste.

Buying Food for Home

As the owner of a restaurant, you may be tempted to skip the grocery store altogether and just use the food in the restaurant kitchen; after all, you get a better discount from your suppliers than the grocery chain. But remember, if you buy a bag of chicken breasts and don’t use them within your restaurant, it will skew your food costs and profits. Especially if you do it on a regular basis. If you want to take advantage of bulk pricing, be sure to note the food is for personal use, and pay it back.

Poor Staff Education

If you have a cook who is consistently burning food or otherwise wasting it, that is going to affect your bottom line. The same is true of an employee who isn’t practicing portion control or rotating food according to FIFO. These are all scenarios that can be remedied with proper training. 

Poor Bookkeeping

Food suppliers have been known to make mistakes on invoices: charging double, not reflecting payments made, and not delivering food that is listed on the invoice. Have someone you trust checking in the weekly food orders to ensure it is all accounted for and matches the invoice. Keep copies of all your invoices and payments in case there are any disputes with your food supplier.

Using Only One Food Vendor

Don’t be afraid to shop around. Even if you prefer one food vendor over another, it doesn’t hurt to check prices and ask food vendors for a match. If you don’t ask, you won’t get it.