Food Cost Management advice as outlined by Donal Ballance of Manage for Profit.
- Do be meticulous about checking deliveries – if you know that what you’ve paid for actually reached your kitchen, it makes your employees uniquely accountable for any losses or shrinkage.
- Do calculate the center-plate cost of each item on your menu and express it as a percentage of its selling price. Then apply a typical week’s sales mix to find out your approximate theoretical food cost – this allows you to see whether you have an issue with pricing, discounting, menu mix or ingredient cost and to make changes accordingly. Understanding where the issues are make for constructive discussion and planning.
- Do carry out monthly or periodic inventory to coincide with the bookkeeping cycle. Compare the numbers that are produced by your bookkeeper and your kitchen management with the theoretical food cost and investigate the ‘gap’. While it’s relatively easy to manage the absolute food cost number, it’s much more difficult to control the ‘gap’, but it’s the size of the ‘gap’ that determines whether management is being effective.
- Do keep a simple record of food wastage – over-production, mistakes etc. – as part of indentifying the ‘gap’, have the kitchen team work to reducing the value of this each week.
- Do create a culture of using up any and every bit of food in the kitchen – freezer inventory, over-production, close to use-by etc. If you offer bar appetizers or an appetizer happy hour, keep the menu flexible and inexpensive. It is better to get some revenue for this food than to throw it out or let it burn in a freezer until its thrown out.
- Don’t demand an instant food cost reduction from your kitchen management. You run the risk that they will immediately look to portion size, ingredient cost or price increase to resolve the problem – all three of which will directly and negatively affect your guest.
- Don’t expect instant results from trying to improve food cost. It’s a planned journey with a route map and milestones that tell you how well you are doing.
- Don’t implement lots of paperwork for your kitchen management or you will end up in a bureaucratic mess. Understand what the issues are (see the do’s) and take practical, operational actions to resolve them.
- Don’t use as your guide any food cost number other than the one generated by your bookkeeper/accounting package each month or period. Have your periodic management-generated kitchen inventory used only to provide opening and closing inventory valuations and have those counts independently validated.
- Don’t allow discussions with your kitchen management to focus on any one issue as a way of resolving food cost challenges. Truly, managing food cost is about understanding five components – plate cost, menu pricing, menu mix, waste management and portion consistency – and about managing each of them efficiently.