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9 Ways to Improve Food Cost at Your Restaurant

Saif Alnasur
Saif Alnasur

Jul 10, 2018 11:23:33 AM

Finding the balance between lower food costs and quality ingredients may seem difficult to accomplish, but there are many ways to achieve this without putting a damper on your restaurant's offerings. 

Your food cost is a determining factor for many elements of your restaurant, but most importantly it dictates your profit margin and subsequently your menu engineering decisions. Here are 9 ways you can improve your food cost, so you can keep your customers happy and coming back for more. 

1. Choose Prime Vendors

One of the main reasons restaurant owners are stuck with higher than average food costs is because they haven't taken the time to choose the best food vendor. While the process may be time consuming, the reward is well worth the effort.

Don't be tempted to settle for the first food vendor you meet with because their offer sounds too good to be true. Instead meet with at least three or four other vendors before making a final decision. Most vendors are willing to accept a lower profit margin if you do larger business with them. Some will even undercut other vendors just to secure your business.  

food cost

How to choose the right food vendor?

  1. Make sure you have a clear idea of what you want from your supplier. Finding the right vendor is more than just choosing the cheapest one. Before meeting with vendors, make sure you have a general idea of what you are looking for. This could be anything from locally sourced produce vs imported produce to delivery schedule. Having a good idea about your inventory requirements beforehand is the first step to partnering with a vendor that is right for you. 

  2. Money. It is important to know how much you are willing to pay your potential supplier before meeting them. This can help you plan what kind of food you can afford for your restaurant. It also outright determines how much you can mark up each dish while still making a profit. The more costly your ingredients are, the more of that cost is going to have to get passed onto your customers.

  3. Know their delivery schedule inside and out. Once you’ve narrowed your potential food suppliers down to a few options, its time to inquire about their delivery schedules. If your restaurant needs fresh produce delivered daily, it is important to know if they can provide that for you. 

    You should also figure out whether or not they can deliver the required items directly to your restaurant or will you have to send someone to pick them up. Transportation costs also factor into food cost, and could be a reason your food cost is so high. 

  4. Is food safety important to them? Food safety is one of the most important aspects of any restaurant or supplier. Improper food safety measures could lead to unfavorable consequences at your restaurant. This is why it is important to know whether or not your suppliers ensure proper measures such as temperature monitoring, and delivery of only high quality ingredients. When you skimp on a quality vendor, you end up paying the price in the long run. 

2. Prevent Waste

Tackling food waste can be approached in a number of different ways, all of which are essential at your restaurant when trying to improve your food cost. Food that is purchased and then thrown away gets factored into your food cost percentages and will definitely bump up the average. 

Below are a number of ways to prevent food waste at your restaurant.

Shop smart: Although this sounds obvious, shopping smart is one of the easiest precautions you can take to prevent food waste at your restaurant. Buying more food than you need will directly increase your food cost. If you are worried about wasting food, try having multiple deliveries scheduled throughout the week instead of one large one at the beginning. 

Portion Control: Come up with recipes and stick to them. Practice portion control to ensure that each dish contains the exact amount of ingredients necessary. A few extra grams on each plate adds up to a significant amount of food waste at a busy restaurant. 

Store food correctly: One of the most obvious methods of preventing food waste is merely to ensure that food is stored in the right locations and at the right temperature. Nothing is worse than finding out all your chicken has spoiled halfway through a busy shift. 

3. Cost the Menu

It makes perfect sense that when you are attempting to improve the food cost at your restaurant, one of the first things you do is cost your menu. Food costing is a procedure that needs to be done regularly to ensure price consistency across the board. Despite how tedious this task may be, it is important to be able to assess which of your dishes are the most profitable and which are the least.

Food costing can bring alarmingly high food costs to your attention, allowing you to make a decision about whether or not a dish gets to stay on the menu or if its time for it to go. 

Once you have determined which of your items are too pricey, you can begin to look for alternative suppliers for each ingredient or alternatively new dishes to replace those using these ingredients.

Free Excel Food Cost Calculator The easiest way to calculate and manage food cost at your restaurant. Download Now

restaurant inventory cost

4. Check Inventory Regularly

Keeping track of inventory at your restaurant is not a suggested practice, it is a required one. Attempt to take inventory at least once a week, if not more, in an effort to better understand your kitchen stock. Your inventory is directly related to food cost and understanding how much is being spent everyday on food. Learn how to do inventory management the right way.

5. Involve Your Staff

Sometimes, poor food cost comes down to your employees. Make sure that you have supplied your staff with proper training, equipment, and a platform to speak up.

Training: Training is essential when it comes to anything related to finances. You can't expect your kitchen staff to have accounting experience, and so it can be incredibly helpful to walk through some of the administrative procedures. 

Sometimes you may depend on your kitchen staff to receive and make orders for ingredients. They should be well aware that the need to check every invoice and delivery note, and subsequently check the delivered quantities to see if they match up. A few short deliveries is all it takes to bump up your food cost percentage.

Equipment: Supplying your staff with the necessary equipment actually plays a big role in improving your food cost. As discussed before, food wastage is one of the biggest contributors to an inflated food cost average, but with the proper equipment, your staff are less likely to waste food.

Example: You've noticed that the colander your kitchen staff use isn't sized correctly and so they lose a small percentage of pasta every time they strain them. To combat this issue, you purchase the correct colander size which reduces the amount of wasted pasta.

Management: Whether you are in charge at your restaurant or you have a manager in place, it is important for the restaurant management to keep its employees in the loop. If food costs are too high, let everyone know, so they can each do their part to help out. 

6. Record All Sales

You may be asking yourself, “record sales? What does that even have to do with food cost?” Surprisingly though, improperly recording sales at your restaurant could negatively affect your food cost.

The following example highlights how. 

Let’s assume your restaurant generates $10,000 in sales every week and operates at 35% food cost, this means the restaurant is spending $3,500 per week on food. If for some reason, 10% of your sales aren’t being recorded, this pushes up your food cost to 38.8%.

Make it a habit in your restaurant accounting to do a sensitive item inventory and record every single sale, no dish should ever leave the kitchen unless it has been rung up on your pos system.

salad buffet cost

7. Optimize Your Buffet

If your restaurant features a salad bar or buffet element this could be a huge reason why your food cost is so high. The main reason most restaurant operators add a buffet to begin with is because of the appeal. People love to dine at restaurants where they feel they are getting more than they paid for. 

If you believe this is the cause of your increased food cost, you first need to figure out how much you are paying per customer. The best time to tackle this problem is on a relatively slow day. Start by costing every single item you are displaying on that given day. After the service is finished, cost the leftover dishes that are still in good condition.

When you subtract these two numbers, the cost before service and the cost after service, you now arrive at the total cost of operating the buffet for that day. Divide this number by the total number of paying customers to arrive at the cost per customer.

Compare the cost per customer to how much you charge each customer. More often than not you are paying more than you are making. But there are a few small changes you can make to start turning a profit from your buffet.

  • Consider changing pricing
  • Seek out more affordable ingredients that don’t skimp on quality
  • Change the number/amount of dishes you display
  • Change the sizes of the plates and utensils

All of these changes shouldn’t affect the quality of your food, but rather the amount of food that is wasted everyday by operating your buffet.

8. Beware of Hidden costs

Way too often, restaurant operators ignore the cost of some of their most commonly used ingredients, which surprisingly end up costing the most in the long run. A few examples of these ingredients include salad dressings, frying oils, seasoning, breadcrumbs, and cooking butter.

The reason these are often ignored is because relative to other ingredients, these are usually the cheapest items to source. Most restaurant operators fail to consider how often they are used though.

Once you’ve realized the problems these items pose, you can begin to look for cheaper alternatives, or change the recipes and procedures to either use less of each item or a more controlled amount.

9. Beware of Operational Costs

A major cause of inflated food cost is what we will refer to as “operational costs”, or better yet – the costs associated with operating a restaurant. These include everything from errors in the kitchen to promotions and discounts that you may offer your customers.

While these costs are often random, you can’t completely omit them from your food cost calculations. What you can do though is take protective measures to prevent these kinds of incidents from happening, or precautious measures to ensure that a promotion doesn’t drive up your food cost at the expense of bringing in a few more diners. 

Free Excel Food Cost Calculator The easiest way to calculate and manage food cost at your restaurant. Download Now

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