In the hospitality industry food costs averages between a whopping 28%-35% of turnover. Reducing food costs is serious business. It affects your bottom line big time.
Let’s face it, the basic equation of check average divided by food purchases simple doesn’t cut it anymore in the highly competitive restaurant industry.
You need accurate insights into food costs.
So how do you bring food cost down without giving in on quality?
These are 9 proven ways to reduce food costs in a restaurant business that we found most effective:
- Know what you are spending
- Portion control
- Pre-portion in mise en place
- Keep menus focused
- By at the best price and be creative
- Love your supplier
- Working from scratch, is it worth the effort?
- Reduce no shows
- Waste as little as possible
Let’s dig in a little deeper into each solution to help you keep food costs down.
1. Know What You Are Spending
You need a system to monitor food costs. It’s hard not to stress the importance of food cost monitoring. Knowing what you are actually paying for food on the table is crucial.
If you aren’t sure what a portion costs, how do you know if you are making any profit at all?
If numbers go in the red, how do you know what to adjust to have all arrows pointing upwards again?
Monitoring your food cost should always be your number one priority. If you want to simplify the whole cumbersome process of doing so, you might want to look into the Apicbase food cost & margin control tool.
Not sure how to accurately calculate and compare food costs?
Download our Free Ultimate Mini-Guide to food cost calculation.
2. Portion Control
Make sure portions aren’t too big.
‘No sh*t, Sherlock?!’
Hold on, hear us out.
First of all, portion control is massively important if you’re looking at reducing food cost. When the portions you serve differ from the portions costed in your recipes, there is no way to compare actual and ideal food cost.
In other words, you won’t know if you are successful at keeping food cost down.
Still, a portion can also be too big. Business owners often are terrified of reducing the size of their most popular menu-items.
But when portions are too big and plates come back half full, waste goes up and money goes in the bin.
Or people start sharing dishes. Instead of two entrees, they order only one. Your check amount goes down.
By reducing portions and price, many restaurateurs have successfully grown their revenue.
Margins go up, because the sell price isn’t decreased in the same proportion as the plate size.
Plus, customers tend to order more, so the number of items sold goes up.
3. Pre-portion In Mise-en-place
This little tip ties in neatly with the preceding one. Like we said: aim for portion control, but admittedly, it’s an easy mark to miss.
In the heat of the moment, when ovens are blazing and the ticket machine is spewing relentlessly, it’s understandable that servings start to vary in quantity.
Understandable but not acceptable in terms of reducing food cost. It’s best to anticipate to this problem in preparation.
When organising mise en place, don’t rely on gut feeling.
Make sure recipes are followed religiously and, measuring cups, ladles, scoops and scales are used. It is the only way to guarantee that quantities are respected throughout production.
So what about service? You know: ovens blazing, the ticket machine hot red…
What you should do is pre-portion ingredients before service starts. By doing so you ensure quantities are maintained even when the pressure is high. This way no-one needs to worry about portion size.
Even the new recruit with the nervous look on his face.
4. Keep Menus Focussed
Don’t offer more menu-items than your customer base demands. Keep track of your sales mix and check whether or not a dish is worth keeping on the menu.
The more menu-items you have the higher the risk of wasting. So keep your menu focused. Menu engineering will save you a lot of money.
It will simplify prepping, procurement and inventory, and ultimately keep food costs under control. Apicbase integrates with your ePOS and offers a complete sales analysis.
The system shows you which recipes are profitable and popular.
5. Buy At The Best Price And Be Creative
Convenience is an easy trap to fall in: ordering the same products from the same supplier over and over again. Don’t get us wrong, the relationship with your supplier will influence food costs greatly in a positive way. We dig deeper into that next.
On the other hand prices vary constantly. Better stay vigilant. Convenience can be a burden on profitability.
Also, even though a previous chef swore a ‘recipe is impossible to make without a certain brand or ingredient, often it doesn’t make a difference at all.
Don’t be afraid to experiment and look for the best solution in terms of quality and costs. Creativity is the bread and butter of every restaurant.
If you want to make things easier for yourself, the restaurant procurement solution in Apicbase makes it easy to order what you need, when you need it.
6. Love Your Supplier
Invest in a strong relationship with suppliers. Don’t take them for granted.
If you find yourself torn between the stove and the spreadsheet and simply don’t have the time to keep a constant eye on costs. You want a supplier by your side that says ‘look man, tarbot is delicious, but I can’t give you a good price today. Why not try brill instead?’.
Knowing your suppliers have your best interests at heart will save you time and money.
If suppliers know you are committed to working with them, they, in turn, will be more invested in your business.
When it’s time to negotiate or re-negotiate product pricing a relationship built on trust will help you get the best deal.
And do ask to negotiate prices. Specifically when your business is growing.
Here are two ways to improve your deal with suppliers (and help you to bring food cost down).
- Ask for a volume report
The report will most likely show that the volume ordered goes up over time, because of extra business at a location or because new outlets are added. It’s possible that prices aren’t keeping track with this growth. The volume report offers a solid base to re-negotiate a deal.
- Intensify procurement
Optimizing deliveries can make procurement more cost-effective for both you and your suppliers.
Discuss ways to make deliveries more efficient and ask what the effect of your actions would be on the price of delivered goods. Less deliveries also saves your team a lot of time. The Apicbase procurement tool helps you get the necessary insights for optimal ordering.
7. Working From Scratch, Is It Worth The Effort?
Working from scratch is great, but isn’t always the best way forward in terms of profitability.
Milling your own flour and churning your own butter is amazing, and can reduce food cost down to 10%, but the labour costs will skyrocket.
Consider all your options. There will probably be an incredible local supplier, who might be doing a better job and offering a great price.
Monitoring costs is crucial throughout the entire food process.
is crucial throughout the entire food process.
8. Reduce No Shows
Don’t prepare food for people that never arrive. That statement doesn’t need much explaining.
Keeping food and labour costs in line is a lot easier if you know how many plates you will be serving. Reservations help you with planning the mise en place and procurement.
No shows, however, are ruining the party.
Whatever the reason may be – miscommunication, an emergency, forgetfulness or a lack of courtesy – diners not showing up for bookings have a big impact on revenue and food costs. Especially if you have extra stock in and staff on hand.
A no show rate of 10 per cent is realistic in the hospitality business. Tackling this problem helps to keep food costs down greatly.
Here are 5 ways to reduce no shows:
- Work with a reservation platform like Eatapp or Tablebooker
Some no shows are due to a miscommunication between staff and customers. A digital table booking platform checks and double-checks. This reduces the number of involuntary no shows greatly.
- If you have your own platform, or only take bookings over the phone, then make sure you take down all relevant data:
- First name
- Last name
- Number of guests
- Phone number
- Email address
Being accurate in taking down details shows you are taking the reservation serious.
- Consider asking credit card details for online bookings. Bookings made over the phone are, in general, less problematic for no shows.
- For big bookings asking a reservation fee helps to reduce the risk of a no show. Reassure clients by making it very clear that the reservation fee will be deducted from the bill afterwards.
- Simply ask. Ask customers to let you know if they can’t make it. Add an extra line in the confirmation email and make sure front-of-staff mentions it every time they write down a booking.
Send a reminder email two days before the booking.
9. Waste As Little As Possible
Reduce food waste by using everything (or as much as possible). Think outside the box:
- Trimmings of a fish filet are great for making fish pies or fishcakes.
- Beef scraps get reduced to sausages and burgers.
- Peel as little as possible. Serve vegetables whole if possible.
- Use preservation and fermentation techniques to utilise all of the vegetable by-products. Or boil them down for hours so all the natural sugars caramelise into a delicious syrup.
- And of course: soups. Soups are the ultimate way to recuperate oddly shaped vegetables and other things that you might otherwise throw out.
Food cost is one of the biggest costs for restaurants and foodservice businesses.
Luckily it is a manageable cost.
The most import thing to do is to monitor your costs. Calculate what the ideal cost is and compare with the actual cost. If your food cost percentage is too high find out what is going wrong and take action.
This might also interest you: 7 causes for variance between actual and ideal food costs.
Having doubts about how to accurately calculate and compare ideal and actual food costs?
Download our free Ultimate mini-guide to food cost calculation.