When it comes to managing a successful restaurant one of the most important numbers to know is food cost. Any restaurateur worth their salt knows their food cost percentage and how to keep it in check while running a restaurant. David Domzalski, who works with Bar Metrix, a consulting firm with offices in the UK, says that it’s imperative that chefs and owners have a good handle on their food cost. “Food cost is a prime cost in the restaurant business because it’s one of the few costs that you can control,” he says. David has worked with restaurants on their food costs for the past ten years and has learned some of the best practices to keep your food costs low.
First, let’s define food cost. “There are three parts. The cost of what you’re buying, how much you’re selling it for and what you’re losing.” All three of those metrics are part of food cost. The formula looks like this:
Actual Food Cost = Depletion / Retail Sales.
Using a formula like this will give you a more accurate handle on what you’re spending. “A lot of restaurants will take their purchase amount and divide it by sales,” Domzalski says. “That gives you a misleading number because it fluctuates wildly based on how much you’ve purchased that week.” For example, if you have a private event coming up and order more product for that week your food cost percentage is going to be higher. Including the depletion rate accounts for any fluctuations in inventory. “A more accurate way to do this is to look at your food cost using data over the course of one month or one quarter,” he adds.
Figuring out your depletion rate is also a key part of having a handle on your food cost and in order to know it you have to keep an eye on your inventory. Domzalski says the best formula to figure out depletion looks like this:
$ amount of purchases -$ amount of ending inventory = depletion.
“That will give you a better idea of what you used in the past week or month,” he says. It should stay pretty consistent from month to month. If it’s very high or fluctuates wildly from week to week, you know that there are issues that need to be addressed.
Always Check Received Orders
One of the first things Domzalski has his restaurant clients do is weigh and check every produce order that comes in to make sure that it’s the correct price and the amount that was ordered. “I had a client who was being shorted three pounds of fish on every order and it impacted his food cost,” Domzalski says. Always check incoming orders against the invoice, weigh them, and check the prices to make sure that you’re getting exactly what you ordered.
Are You Tracking Everything?
One of the biggest mistakes that Domalski sees chefs make is that they don’t track key parts of their kitchen that will have an impact on food cost. “Kitchens need to make sure they have the right systems in place to track the metrics of inventory and what you’re losing,” Domzalski says. He recommends keeping a log of how much product was used for family meals, as well as a butcher’s log and a receiving log. “It’s key to track these things so you can know where you can make adjustments.”
Make sure that the portions going on each plate are the portions that you specified. It may not seem like much, but a difference of two ounces over the course of a month or a year can make a big difference, Domzalski says. “I’ll tell chefs to use a six ounce scoop for their mashed potatoes just to make sure it’s six ounces every time.” Using scales when portioning proteins and specific containers for vegetables or sides can also ensure that each plate coming out of your kitchen has the right portions for your food cost.
Set Par Levels For Each Dish
“I’ve talked to so many chefs who set their pars by ‘going with their gut’,” laughs Domzalski. It’s tempting to just wing it and say you’ll need six lobsters dishes prepped or ten chicken or whatever, but you should take a look at historical data to really understand how much of each dish needs to be prepped. “You need to have data in order to set your par,” Domzalski says.
Keeping a handle on food costs can help you run a more successful business but you have to keep track of the data. “If you can’t measure it there’s no point,” Domzalski warns.