If you’ve ever watched “The Bear,” you know the high-stakes world of restaurant kitchens. Amidst the chaos, one thing remains constant: the importance of managing food costs. Just like Chef Carmy and his crew, every food and beverage establishment must master the art of balancing their books to stay afloat. Food cost, expressed as a percentage, is the measure of your food production expenses against your revenue, and it’s a key player in determining your profitability. Let’s dive into how you can manage this critical aspect and keep your restaurant running smoothly, just like the pros on TV.
The Interplay of Food Cost and Menu Engineering
Food cost management and menu engineering are intrinsically linked. By understanding which menu items yield the highest profits, restaurants can strategically design and price their menus to optimize food costs. This blend of food cost management and menu engineering is a strategy heavily relied upon in the food and beverage industry.
Accurate Food Cost Calculation
While the industry standard formula for calculating food cost involves [Opening Stock + Purchases – Physical Inventory], a more precise method includes mandatory recipe costing. For instance, if a chicken recipe lists 200g of chicken thigh per portion, but the chef uses 300g, this results in an extra 100g consumed for every two portions sold. Over 100 portions, this discrepancy equates to an additional 10 kg of chicken. Accurate recipe costing helps in precisely measuring and controlling consumption.
Monitoring Ingredient Costs
Monitoring ingredient costs is essential. Any spike in costs necessitates exploring alternative ingredients or, worst case scenario, eliminating the menu items high on food cost if the market is price sensitive. Menu engineering data aids in these decisions by continuously analyzing menu performance to maximize profits.
Menu Engineering Matrix
A standard menu engineering matrix categorizes menu items into:
- Stars: High profitability and high popularity.
- Puzzles: High profitability but low popularity.
- Plow Horses: Low profitability but high popularity.
- Dogs: Low profitability and low popularity.
How Restroworks Streamlines Food Cost Management
Managing food costs is like walking on a tightrope, it is a very delicate balance that needs regular and immediate corrections to maintain profitability. Reporting tools turn ingredient chaos into crystal-clear insights. Inventory reports track every onion ring and sprig of rosemary, accounting for usage and waste. With this knowledge, restaurateurs can pinpoint inefficiencies, identify over-priced vendors, and banish mystery recipe shrinkage. Reporting tech empowers restaurants to make data-driven decisions, turning food cost control from a guessing game into a culinary superpower.
Restroworks’ unified platform offers comprehensive tools for managing food costs through detailed reporting and precise definitions. For example, the Gross/NetMargin report as a percentage: This report delineates how much Profit% margin each menu item is bringing. For example, take the item on the first row. Net sales Value 625 and cost Value is 135. Then Net margin is 78.28%.
Net Margin is the value without Tax and Gross Margin is value with Tax.
Most of the Food and beverage establishments target 30% food cost. The person responsible for the establishment’s analytics must keep the Executive Chef or the F&B manager abreast with this intelligence so that timely action can be taken to manage costs and eliminate menu items that are ‘Puzzles’ or ‘Dogs’.
Definition and Reporting
- Raw Material Information: Restroworks provides detailed information on raw materials, including their usage across different recipes.
- Recipe Information: Restroworks also details yield loss percentages, letting users know how much of the actual ingredient is fit for usage in the final menu item after it is processed, and also allows for adjustments in selling prices while offering a preview into the effects of the cost changes on your profits.
Food Cost Percentage
Food cost percentage is displayed via two methods: Ideal Cost % and Actual Cost %. Ideal cost is based on recipe definitions and recorded semi-finished production, while actual cost includes recipe costs, wastage, and physical stock transactions. To put it simply, ideal cost is what your restaurant should be bearing for optimum performance while actual cost shows the current costs your restaurant is bearing.
Dynamic Food Cost Calculation
Restroworks offers four configurations for food cost calculation, allowing flexibility based on operational needs, as per the choice of what the restaurant considers the idea cost:
Configuration 1:
- Ideal Cost: Wastage Cost + Recipe Consumption Cost
- Actual Cost: Physical Stock Entry
Configuration 2:
- Ideal Cost: Wastage Cost + Recipe Consumption Cost
- Actual Cost: Wastage Cost + Recipe Consumption Cost + Physical Stock Entry
Configuration 3:
- Ideal Cost: Recipe Consumption Cost
- Actual Cost: Wastage Cost + Recipe Consumption Cost + Physical Stock Entry
Configuration 4:
- Ideal Cost: Recipe Consumption Cost + Wastage Cost
- Actual Cost: Wastage Cost + Physical Stock Entry
Reporting Depth
Restroworks provides in-depth reporting, that can be viewed in including:
- Standard Food Cost Report: Details of raw materials on ideal and actual food cost percentages for items across the menu.
- Section Wise Food Cost Report: Breakdown of costs classified under sections of the menu. For example, ‘Food’ section and ‘Beverages’ section.
- Category Wise COGS Report: Comparison of ideal vs. actual costs classified by category and items.
Identifying Discrepancies Through Monitoring Consumption
The consumption report in Restroworks helps identify discrepancies by providing data on opening stock, purchases, stock in, consumption, yield wastage, reuse, return, and closing stock.
Clicking on consumption quantity reveals detailed menu item usage, helping verify ideal versus actual consumption. Restaurants can benefit from consumption reports in several ways. Firstly, these reports allow managers to pinpoint inefficiencies in their inventory management and address them promptly. By understanding which items are overused or wasted, restaurants can optimize their purchasing decisions and reduce unnecessary expenses. Additionally, the detailed insights into menu item usage enable more accurate forecasting of demand, leading to better stock management and reduced instances of stockouts or overstocking.
Effective food cost management requires defining ideal costs accurately and monitoring actual costs meticulously. Taking timely corrective actions to address fluctuations ensures sustained profitability and operational efficiency. Consumption reports support this by providing a clear picture of cost variances, enabling restaurants to implement targeted strategies for cost control. Ultimately, leveraging consumption reports can lead to improved profit margins, enhanced operational processes, and a more streamlined approach to managing food costs.
