Restaurant Food Costs: How You Can Reduce Them in 2020
The new year will be soon upon us, and as competition steadily increases, industry leaders are recognizing a need to decrease operating expenses to account for the rising price of food and labor. Restaurant food costs, when combined with labor, make up the majority of operating expenses.
Eventually, the goal is to reduce expenses all around, but the first step is to take care of your restaurant food costs. Here’s how to decrease them in the upcoming year:
Conduct Inventory at Least Once per Week
Good inventory management requires you to have a good strategy as well as a good team. Don’t neglect employee training when it comes to inventory responsibilities. Make sure they are up-to-date on processes, and cycle inventory responsibility through different employees week to week.
On the strategy side, make sure to practice the first in/first out (FIFO) method. This is essential to ensuring freshness and preventing waste. Also be sure to prioritize inventory management for high-cost or high-use items, like protein and produce.
It’s a good plan to monitor inventory levels by total dollars, making sure beginning inventory and ending inventory dollars are relatively close to each other every period. While this is an arduous task, it can be made easier by implementing a restaurant management system.
Check out our free e-book: 5 Reasons why Merchants Should Use an Embedded POS System
Manage Food Waste
Food waste can be a major detriment to your profits without you even realizing. Make sure you prevent this by keeping records of what waste your restaurant creates. Mark this on a chart under categories like
- Food returned because it was made incorrectly
- Food spilled on the kitchen floor
- Food burned in the kitchen
- Too large portion sizes that get thrown away
Knowing where your food waste comes from is the first step to decreasing high restaurant food costs due to excess and unnecessary waste. Once you know this information, you can set up solutions to and conduct more training to solve these problems.
Control Your Portion Sizes Appropriately
Also related to waste is portion size. A lot of food waste can directly be tied to the portion sizes you serve. Make sure you are consistent, and you don’t over- or under-fill plates. Determine whether or not your portion sizes are too large by watching plates as they return to the kitchen. What’s left on them? If there is quite a bit of food, your portion sizes are probably too large. Utilize restaurant portion control tools like scales to make sure you are serving the right amounts to customers.
Make Sure Menu Items are Priced Appropriately
Appropriate pricing not only ensures that your customers are happy enough to return, it also ensures you get a profit. You shouldn’t rely on guesswork and estimations to figure out your menu pricing. Sit down and analyze the hard figures to determine the optimum prices.
Your direct costs are what you pay for the food itself, while indirect costs are what your customers consider the value of your food to be. If the perceived value of your food is higher than your direct costs, including prep time and labor costs, you will make a profit. This profit needs to be enough to cover overhead costs like décor, presentation, and marketing. It may take some trial and error, but you will eventually land on a sweet spot, where the prices are low enough to entice customers, but high enough to yield a good profit.
Looking Ahead Into 2020
Cutting food costs involves a lot of groundwork, but it doesn’t have to be a burden. With the right technology at your fingertips, you can leverage critical inventory data and management tools to help control restaurant food costs and increase profits.
NCC offers industry-leading restaurant solutions that help reduce costs and increase visibility so you can maintain tight control over your operation. For more information on the technology we offer, contact us today!