Conquering Food Costs
In a business with notoriously thin margins, managing food costs is job one in restaurant kitchens.
Shai Fargian is a bit of a math geek and that, says the chef/partner of Charlotte, N.C.’s three-unit Yafo Kitchen, is every bit as important to the restaurants’ success as his culinary chops and people skills.
“One reason restaurants fail is because chefs focus on the artistic aspects, while losing sight of things like food costs," he says. "That’s not sustainable long term."
His college degree in economics certainly helps, but so does close monitoring of food costs and careful balancing of higher and lower margin menu items. “Falafel has a very different cost than rotisserie-cooked Marrakesh lamb with harissa yogurt. And that’s how you build a menu, bringing in a mix that allows the kitchen to hold a food cost.”
Gregory Beachey, associate dean of Chicago’s Washburne Culinary Institute, drives home that idea, emphasizing that restaurants live and die by food costs. “Menus have to be designed holistically, as an integral part of the operation,” he notes. “You can’t calculate food costs without knowing labor costs, the lease and utilities. It all goes together.”
For students, he says, one of the most important lessons is that every scrap of food that goes into the trash is lost money. “It’s pennies, but margins are thin and they add up,” he continues. “Look at it this way: How many seats are in the restaurant, how many turns per shift, how many people? If you waste 15 cents per person, that’s a big number over the course of a year. It might be the difference between success and failure.”
Beachey also says smart buying is a discipline worth mastering. “Know your inventory inside and out and try to have each ingredient used in at least two preparations,” he says, adding that outside partnerships are essential. “Have a good relationship with your vendors and trust them to act in your best interests.”
Calculating Food Costs
A lot more goes into food costs than the calculation of menu price versus expense of the ingredients. For accurate accounting, factor in these hidden costs, says Washburne’s Dean Gregory Beachey:
- Wrong or improperly prepared guest orders
- Unserved/leftover food
- Shrinkage from theft
- Food trim, cooking shrinkage and waste
- Order and delivery discrepancies
- Improper portioning
- Not adhering to standardized recipes