Being able to control food cost in your restaurant can be the difference between making money and losing money every month. Most successful restaurateurs spend as much time on it as they do on their marketing and menu planning, if not more! Here are seven tips you can use to reduce food cost in your restaurant management, giving you one less thing to worry about so you can concentrate on growing your business and making more money.
Food cost definition
Food cost is a term used in restaurant management. Food cost percentage is how much of each dollar made by a restaurant goes towards food costs. The higher a restaurant’s food cost, the lower its profit margin. A high food cost also means you may be paying more for your favorite dishes than you should be. You can reduce food costs by modifying menu items and/or food preparation methods at your business. you’ll be able to find the perfect food restaurant in Wolverhampton to suit your needs on this list of the 20 best food restaurants in Wolverhampton.
Food Cost vs. Labor Costs
In restaurant management, food cost is one of two major expenses (the other being labor costs). Your goal should be to bring food costs down as much as possible while maintaining a decent profit margin. One way you can reduce food cost is by purchasing ingredients in bulk. By negotiating with wholesalers and suppliers, you might be able to lock down prices on certain items.
If you’re serving a popular item, it might also make sense to keep a larger inventory than normal on hand. When customers come flooding through your doors looking for that particular dish, you’ll have it ready for them without having placed an order—and without paying extra for more stock.
Ways to Measure Food Cost
Food cost is typically calculated by dividing your food costs for a given period by sales for that same period. If you add beverage, merchandising and other operational costs, you’ll have something called overall restaurant cost of sales.
You’ll then figure out how much of your total sales go toward covering those costs—which is one way to measure food cost. There are several other things you can do to manage your food costs more effectively; working with someone like a consultant who specializes in restaurant management can help ensure you get optimal results.
Learn From Others
Food cost is one of your most important restaurant management expenses, accounting for nearly 40% of your total expenses. To minimize food cost you’ll need to get a sense of what you should be paying for food. The best way to do that is by visiting other restaurants and taking an inventory of what they’re buying and how much they pay for it. You can then compare that information with your existing food costs and make adjustments where necessary. Not only will you save money but chances are you’ll also keep customers coming back when they see high-quality food at affordable prices.
Keep Accurate Inventory
In order to save money on food cost, it’s important that you have complete and accurate inventory of what you have on hand. You can’t control what you don’t know, after all! If your inventory system is ineffective or inaccurate, then it will be nearly impossible for you to make informed decisions about how much food and supplies you need. So make sure that your restaurant has a strong inventory management system in place.
Order the Right Amount of Ingredients
It may sound counterintuitive, but buying ingredients in smaller quantities can actually reduce your food cost. That’s because you tend to order more ingredients (and use more food) when you order too much. You also pay for that inventory when you sell it, so you want to make sure that what’s on hand is selling. An easy way to do that is by calculating an average daily price (ADP) for each ingredient and ordering according to these calculations.
Purchase Ingredients at Competitive Prices
Making great food starts with purchasing ingredients at competitive prices. Many chefs look for products on sale, such as fruits and vegetables that are nearing their expiration date or butchers that are cleaning out old stock. Purchasing these items reduces cost and can save money for your restaurant. However, if you want to reduce food cost in restaurant management, Southampton has seen a great increase in the variety of restaurants available to its residents, and this list aims to list the top 20 Best Food Restaurants In Southampton.
Looking at everyday items is also important because small adjustments can add up big savings. For example, you might be able to obtain wine at a discount by purchasing it directly from a distributor or selecting wines that have been sitting on a store shelf longer than usual due to slow sales. Investigate alternative suppliers with good quality food at cheaper price tags and start saving today!
Don’t Worry About Profit Margins, Focus on Food Costs
Food costs often determine what restaurants can charge for their meals. For example, if a restaurant makes £100 from food sales and has £20 in food costs, it can afford to sell meals at £80. But if food costs rise to £25, then that same restaurant only makes £75.
If that business wants its revenue-per-meal margin of 50%, it must now charge customers more for each meal or reduce food cost by cutting portions or ingredients—something restaurants may be unwilling or unable to do for customer satisfaction reasons. But if you manage your restaurant’s margins wisely and keep a close eye on your food costs, you’ll make more money than if you focused on profit margins alone.
Control Portion Sizes
Portion sizes can really add up, so a good way to reduce food cost is by reducing portion sizes. Offer half-sized portions of your largest menu items and encourage customers to order an extra side. While it may seem like you’re encouraging more food purchases, most people will be satisfied with a smaller plate and even stop ordering sides entirely once they realize how much food there is on their plate already. It’s especially helpful if you have traditional American fare on your menu because one half-sized portion can easily feed two people (or one hungry person).
Endeavor for Customer Loyalty and Higher Check Average
Generating more revenue per table is a vital restaurant goal. The fact is that customer loyalty drives up check average, which means you can collect greater food and beverage (F&B) profit. Customer loyalty comes from providing excellent service, but it’s also related to value. For more information about restaurants visit our website best bizz.
Customers are far more likely to return if they feel they received good value for their money, and food cost plays a significant role in creating that perception of value. Focus on reducing your food cost percentage so you can deliver more quality products while keeping your customers happy and satisfied.
Conclusion
Food costs are an important cost component of restaurant management. Some managers will make direct changes to food purchases, while others try to cut food costs indirectly through things like portion control. Either way, you can use these tips from industry insiders to reduce your food costs and make more money for your restaurant. Have other ways you’ve saved on food cost? Share them with us!
