The Big Ka-Ching Of Food Costs

The Big Ka-Ching Of Food Costs

A disciplined approach makes a difference when it comes to taming food costs. We offer fail-safe tips for a tight rein.

In the hierarchy of cost centers, food hangs high. “It’s definitely in the top three,” says Linda Lipsky of Broomall, Penn.-based Linda Lipsky Restaurant Consultants. “Food, labor and liquor are the top restaurant expenses so it’s something operators need to manage closely.”

Regardless of how good intentions are, operational frenzy often interferes, crumbling even the best food-cost savvy intentions. “In the day to day, it’s easy to let it go,” says Lipsky.  But with serious bottom-line repercussions, she advocates for strong food-cost management. “Labor looks like a large number on the books so people are more aware of it. With food costs, it’s a lot of nickel and diming but it quickly adds up.”

When assessing food costs, Lipsky considers nine areas. She walks through each one, emphasizing
why they matter.

Purchasing: 

It’s easy to go with the familiar ease of a regular order placed by phone and stored nowhere else but in memory; that’s a practice that should stop. “It’s vital to keep a record of all orders so you know what is actually coming in, what you have and how much everything costs,” Lipsky minds. Even a scrap of paper is better than nothing, but a dedicated notebook is a tried-and-true method that works well.

Receiving:

Ban the 12:00 lunch-crunch delivery and aim for a time when orders can be properly received—weights and prices checked, items counted, reconciled and inspected.

Security:

Most smaller operations don’t have formal product requisition procedures with sign-outs. Lacking that, secured storage areas are crucial. Consider locked cage in the walk-in for costly items, security cameras and motion-sensor lights.

Inventory:

Create a systematic and more-detailed method for inventory that breaks down products by category—dairy, fresh, canned, desserts and so on. “This way, if you have a spike in costs, you know exactly where it comes from. You can deal with it then,” says Lipsky.

Storage:

Make sure your storage area is well organized so it’s easy to see and find what’s already on hand. This prevents perishables from being pushed to the back and also limits time wasted searching for product that may be on hand.

Production:

It goes without saying that forecasting and production should be closely aligned, minimizing waste. This also is an area to weigh the cost efficiency of pre-cut and pre-portioned product versus doing such work in-house. “If there’s downtime at the beginning or end of shifts, a lot of cutting and portioning can be done,” Lipsky notes. “It’s important to determine the real cost of in-house and portioned buys.”

Sales:

Tracking: Used effectively, technology and POS systems are your food-cost allies, allowing prices to be entered, menu items to be pulled in and costs assessed. “If you don’t have good data to begin with, none of it will make sense,” she says. To amplify the point, Lipsky says that something as simple as differentiating between voids makes a difference. “Server-enter errors are one thing, a void that reflects a meal that was prepared and not served or paid for is entirely another in terms of costing.”

Administration:

Fight the complacency that seeps into long-term relationships. “Prices change constantly,” minds Lipsky. “Don’t assume that what you had last month will hold. Keep checking. It’s okay to say, ‘I need to see pricing that you’ll hold for a week. I want to compare it with other vendors.”

Simple Food Cost Tactics For Right Now

  • Instead of being overwhelmed by food-cost controls, get it front of them with simple steps that can be put into place easily. Each of the three that follow is totally doable by the end of today. Results will quickly and positively be felt.
  • Nothing like a refrigerated walk-in or freezer to discourage first-in, first-out product rotation. “It’s cold in there and no one wants to spend time,” notes Lipsky, adding that the tendency is to put the new delivery right in front of what is already there, especially with highly perishable dairy items. “Go to a thrift store and buy a few winter coats and some gloves to wear. That way, no one has to wear their clothes and they’re more likely to spend time rotating product.”
  • Theft is rampant in restos. “Everyone eats, so everyone can use your assets,” Lipsky advises. Staying on top of employee theft is a big job but getting clear, plastic trash bags is a simple starting point. “With Cryovac-packed meat, it’s easy for employees to tuck it in the trash,” says Lipsky, adding that reclaiming it from the Dumpster out back is a snap. “Also consider installing motion-sensor lighting in the trash area, especially if it’s close to where employees park their cars.”
  • Put a lock on storage areas in which high-cost items such as meat, liquor and seafood are kept. And don’t overlook expensive pantry items such as saffron, truffles and vanilla as lock-up candidates.
  • Wrong orders are a fact of life in restaurants: sauce added when the request was for it on the side, a meat cooked to well instead of medium rare. Lipsky suggests that the common practice of allowing employees to consume such mistakes should stop immediately. “It removes any tendency for them to happen on purpose,” she says. They can be donated to a food bank rather than wasted.

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