Don’t Throw Away Your Profits: Managing Your Food Cost


It is no secret that the “profits are in the pennies” when owning or operating a foodservice business. Consumers today, are more price conscious and value driven that foodservice operators must effectively balance their menu prices along with portions to meet their customers expectations. It becomes even more challenging as the cost of food has risen 2.6% per year over the last 20 years and the price of beef alone has increased 14% in 2014 according to USDA numbers.Here are a few tips to manage your food cost.




  1. Cost your menu as a whole and not as an individual item.
    In other words, one item that is not a big seller but a staple item that needs to be on your menu such as a steak may run a 40% food cost due to the cost of beef. However, a higher margin, high selling item such as an appetizer or pasta entrée should have a lower food cost to offset tFoodCosthe higher food cost items.This is called “menu mix” which is key to a balanced food cost. Menu mix is based on higher cost items with lower sales volume than low cost times with higher sales volume. Remember that percentages are a measurement of profits. Margin in dollars is just as important as percent.


  1. Implement systems and tools. Having the right systems and tools in place will help to minimize wastage along with over serving of dishes. There are tools that can be used to control portion sizes along with ensuring that recipes cards are readily available and followed. Another system would be to pre-portion ingredients. For example: If you are making a peperoni pizza, you can pre-portion the dough, cheese, and peperoni and use a specific ladle for the sauce according to food cost and recipe specifications. Most importantly, train your staff.


    1. Don’t throw away anything. Striving for 100% utilization of products helps to maximize revenue opportunities while driving costs down. Vegetable scraps can be thrown away or used for soup, meat trimmings can be used for meatloaf, bruised or damaged tomatoes can be used for sauces. The bottom line to maximize your bottom line is, don’t waste and be creative.


  1. Ensure sustainability. If you are planning to change your menu seasonally or do not plan to change it at all, ensure that there is a steady supply of products necessary for your menu items. If you build a dish around a seasonal product, your costs are going to fluctuate and sourcing the ingredients may be challenging. This often times leads to inconsistency in your menu price and quality. Your customers will not be happy about that.