Why is my FOOD COST so high?
Whether you are in restaurant management operations, in a restaurant consulting role, or even a line or prep cook, this is a question you will hear again and again throughout your career.
In the spirit of keeping the doors open, you only have so many expenses before you start nearing 100% of your revenues, which as we know is a percentage we need to stay south of to operate. With food cost sometimes chewing up ⅓ of that 100%, we need to be diligent in controlling food cost of sales. So how do we do that?
That's a question that can be over complicated and over analyzed by most of us in the industry.
There are so many moving parts in that number, that most people look EVERYWHERE to nail the culprit; Purchasing, production, waste, over portioning, mis-ringing, line mistakes, improper storage practices, pricing, menu mix, inventory counting errors and on and on. . .
The first thing I do when I am asked to “find the problem”, is to ask one simple question;
“What is your food cost supposed to be”?
As I listen to answers like, “I’m not sure”, or “24%”, or other responses, I will chime in saying that, in order to start really making an impact of driving down your costs, we need to know what the “ideal” food cost number is. The IDEAL FOOD COST or THEORETICAL FOOD COST, is the percentage of total food sales, that if everything in your restaurant was perfect, this is what your number should be.
When I first started in the business, when inventory and calculating food cost was all done longhand without the aid of ANY computers, that number was tough to figure out. However with today's programs and systems, most POS reports can provide that number for you. Let’s say that if you wasted ZERO, didn’t make any mistakes, nothing went bad, nobody ate free, or stole anything, your IDEAL food cost would be 27.5%. Now if your inventory procedures are correct, and the number that spits out on Monday morning is 27%, but you think it “should be” 24%, then you are doing something very wrong! You see if you have an ideal of 27.5%, and you are running a god awful, horrible 28.3%, you are actually where you should be. The only way to drag your costs down to 24% is if your ideal food cost is lower than that.
If you’re a steakhouse and your menu mix is all Filets, T-bones and Strips, then you will never and should never see an actual or ideal that low.
Open an pizza and pasta restaurant for goodness sake.
On the other hand, let’s say that you know your ideal food cost is 27.5% and your results show you’re at a 34%...Now what? Where do you start? Must be purchasing, right? Should you change all your vendors so you can reduce purchasing costs? How about the cooks line? You see a lot of mistakes on busy nights with dead food in the window all night. . .Must be there! Or those darn servers are ringing in the wrong food all night long! Maybe you have a thief? It could be all or any of these quite frankly, but the FIRST place I look, and you should too, is in the prep kitchen with your production team, and here’s why.
It starts with your daily prep list for each day. . .You DO use one, right? Who is filling it out and what are they basing their information on? Overproduction of food is one of the main issues i see everyday. If you are making so much product that it expires before being used, then you have a big problem. If your prep cook is doing the list, they may be trying to make their job easier by over producing items so they don’t have to make it tomorrow. Produce is a prep list killer, as to how sensitive it is to time, temperature and handling. It is critical that the production sheets are done with supervision, training and data, to make sure you aren’t tossing ½ the line 3 days later.
Under producing is bad as well, as then the line cooks are making items on the fly all night, where it is much more difficult to do things correctly and safely.
Back to the prep team. . .So let’s say that they are prepping items, by using the products shelf life and the menu mix to come up with the daily production numbers. Great! Now it is on them to prep everything properly and to spec. What systems are in place to insure this happens? Will the GM stand over the crew all day to insure compliance? No, they won't.
They can however check the waste log that is in the prep area. Waste log? Yes, waste log. This tool, if used honestly, can be a valuable tool to see what is tossed each day. . .Things like food out of shelf life, prep mistakes and line mistakes can be accounted for.
Waste bin inspections are something that a lead cook or manager can inspect each shift. They are typically clear containers that prep scraps will be tossed into; A and B lexans are great for this. This is where you see things like produce scraps and how efficient the prep cooks are. They can’t dump it until you see it.
Then you need to do something about it. . .This is a coachable moment on most shifts.
How about those recipe books for every item on your prep list? Not only how to make complicated build-to recipes, but even the restaurants spec on the chop of onions should be listed. Every corporate casual dining chain ever, has detailed specs and recipes for everything made. So independents should take note of this and do the same.
There are plenty of ways that food dollars are lost each day, and I would be remiss if I didn’t add that beyond the prep kitchen, there is plenty of money to lose. Even things like sloppy and inconsistent counting and data entry practices can skew the number.
However, if your production methods and production team are loose, then my experience tell me that repairing this area is a BIG part of getting closer to your ideal food cost. My goal for the actual vs Theoretical cost is .5% to .75%. So once you know the ideal cost, and then look at your actual cost, you then can drill down from there.
Bear in mind that if you have an accurate theoretical number to go on and your actual costs are lower than that number, I caution any celebration. You then have either inventory inaccuracies, or you are cheating the guest. Just understand however that picking a number out of the sky for what your food cost should be is a dangerous path to take.
Understand the process. . .Understand your results and SHARE these results with your team. It used to warm my heart when a line cook was waiting outside my office waiting for the weekly cost of sales number. . .If they care, it can be as good as it is supposed to be!