Restaurant Food Cost Control

You might have the best food in town, but your restaurant may not be profitable without proper food cost control!

I recommend starting by establishing a theoretical food cost using inventory control and

menu mapping software. Toast POS has Xtra Chef and I have found Margin Edge to be

user friendly and very popular in our industry. The inventory software updates current

prices from the invoices that are entered in the system from your suppliers. By building

all batch recipes into the software and then all menu item plate builds it will calculate a

theoretical food cost for each menu item. This software will interface with your POS

system to receive a product mix of menu items sold. This will calculate from the mix of

menu items sold and actual plate cost what your theoretical food cost is.

Achieving your theoretical food cost is impossible.

Why? Because the only way to hit your theoretical food cost % perfectly is if:

• Every portion is executed with precision.

• No waste, no spoilage.

• Zero mistakes in receiving.

• Every system runs 100% perfect.

• No products are walking out the back door.
  

In other words: it’s not going to happen.

COGs % is not a performance metric. It’s a result. A trailing number.

If you want to measure actual performance in your kitchen, look at this instead:

Actual (which is based upon inventory usage) vs. Theoretical Food Cost.

That variance tells you:

- How tight your portion control is

- Whether your team is following recipes

- If receiving is being done correctly

- Where waste is bleeding margin

- If theft is slipping through the cracks

The smaller the gap, the better the operation.

You don’t manage food cost by just watching the COGS number.

You manage it by closing the gap between what should happen and what is happening.

Recommended Tools/Systems to implement in your business:

• Track waste daily: Ring up all waste on your POS and assign a comp key to

waste

• Standardize Portions: Have an assigned portion for each ingredient in batch and

plating recipes.

• Conduct a line check each shift to ensure product is stocked for the shift,

products are fresh and taste delicious and be certain each item has the proper

utensil for the proper portion being served. For Example: a 4oz ladle to be used

in a sauce that is 4oz per serving

• Implement a Purchase Order system to include the amount and price of all

products ordered from your suppliers. Use proper receiving processes to match

the Purchase Order to the amount of product ordered at the price quoted for that

product.

• Weigh all protein items. If you buy it buy the pound, be certain to weigh it and

receive it by the pound

• Establish a prep schedule following the amounts you will need for batch recipe

and pre-portion products following the shelf life of those products to minimize

waste.

• Conduct menu engineering reviews quarterly.

• Negotiate supplier contracts quarterly

• Conduct weekly inventory to measure actual usage food cost vs theoretical food

cost

• Train, Train and Train to ensure execution and consistency. I suggest preparing a

dish after line check at each shift at pre-shift meeting with a line cook. Use the

recipe and follow it exactly. Show, tell and taste with the team to ensure menu

execution and continued education of the products you sell.

Remember for the most part our total sales are created by the sale of food and

beverage. Some concepts have merchandise sales. It is the profit from these sales that

must pay for every expense line item on your P&L after the Cost of Goods. You must

protect your margins. That requires having operating systems in place and leadership

that exercises the operational disciplines to execute those systems each shift.

For support on determining proper Food Costs for your restaurant, please send us a message via the contact form below!