If you run a restaurant or caterer, costs are never far from your mind. Margins in the food business are razor thin, and effective cost control can be the difference between a profitable restaurant and an empty storefront. The following list are the 9 basic elements of food cost control for restaurants. If you’re looking for a list of the vital equations for food cost control, then follow that link.
Fair warning: they are basic, so don’t expect anything brilliant. But, it’s easy to neglect one or two of these, so I’ve put them all up here in full. Pay attention!
7. Order taking
8. Cash receipts
9. Bank deposits/accounts payable
Purchasing is PositSum’s specialty, so if you need help purchasing, contact us. However, if you don’t want our help, then you at least need to know how to purchase effectively.
Whenever you order new supplies, you need an accurate record of how much you have on hand, how much will be used before the next time you order, and what sort of cushion you want. Your record of how much you have on hand can be done in any way you please.
How much you’ll use depends on your forecasting, which can be quite difficult to do, especially when you’re first starting out. My advice for newcomers would be to order more than you think you’ll need for crucial items, and rely on quick trips to the store for non-crucial. If you’re a fried chicken restaurant, it’s not terrible to be out of tomatoes for half a day until someone can make a quick trip to the grocery store, but it is pretty awkward to be out of chicken. This extra amount over what you need is your cushion.
Inventorying, forecasting, and ordering require accurate records. Your records need to reflect the supplier, prices, unit of purchase, product specifications, and amount. These records should go back as far back as possible, as a longer period will help you with your forecasting. Digital records will make this easier than paper records.
Cost control benefits: order just the right amount of supplies. If you order too much, they’ll spoil before you can use them. If you order too little, you’ll lose sales or have to restock at a grocery store, which costs time and money.
Once you’ve placed an order, you need to receive it. Duh, right?
Upon receiving an order, you should immediately verify what’s in the order versus your own records, especially with regards to product specifications and amount. You should check the brand, grade, variety, and quantity, and make sure that the price you’re asked to pay is the price you were quoted. If any receivables are incorrect, you should note them on your end, and make your delivery man (or woman) note it as well.
Cost control benefits: by verifying your order, you prevent paying for stuff you don’t want. It’s simple, but nothing costs more than supplies you can’t use, because there’s no way to get your money back on them.
Move your receivables as quickly as possible from the delivery place into storage. Make sure to maintain temperature control, adequate ventilation, and freedom from contamination. Any expensive items should be under lock and key, and the storage in general should be away from exits or foot traffic.
Cost control benefits: by moving all items quickly into storage, you make sure that you can use all the items you paid for. And by preventing theft, you save yourself from losing items or even employees.
There should be a limited and specific number of people who are empowered to remove items from storage (i.e. head chefs and bartenders). This issuing itself should not happen often. Basically, make sure that people are only in storage when they have a reason, and that each item taken from storage is accounted for in the records.
This is easier said than done, but it is essential. This is especially a problem with alcohol and high-price food items (like steak), which are relatively easy to carry out the door and cost a lot for their weight. Businesses that rely on beverages for a large part of their revenue should have an especial focus on issuing.
Cost control benefits: strict rules about issuing obviously prevent theft, but they also aid with food loss from other sources, like contamination or spoilage. Fewer people in storage means fewer chances for things to go wrong. Also, it can allow for quick inventorying, if you assume the only food that’s gone is the food that’s been issued.
As you can probably tell by now, cost control relies in large part on procedures, and food prep is no exception. Each item prepped or plated needs to have a specific method that limits the amount of food that’s wasted. You paid for the food already, so use it!
Cost control benefits: obviously it helps limit food waste. But it also makes purchasing easier: if you know how much of each item ordered is usable, you’ll know how much usable food you’re buying (versus how much you’re purchasing as a whole). Then you can carry out more involved calculations, like if it’s worth it to buy a pre-prepared version of the item.
Similar to preparation, each product on your menu needs to have a pre-assigned portion. This should be stuck to religiously.
Cost control benefits: the same as preparation, but with an added twist. What would you think if you ordered a steak at a restaurant and got 4 ounces, but your friend ordered the same steak and got 8 ounces? Not a great restaurant, right? Effective portioning is also an important part of quality control.
7. Order taking
In our cost-controlled restaurant, there are procedures to everything. Orders are no exception. Every order has a paper trail, so it is clear why the food is being requisitioned and how much money you should be making. All of this will go into your records, as well.
Cost control benefits: prevent theft, estimate revenue, make it easy to forecast. It’s a triple-header.
8. Cash receipts
Order taking is on one end, cash receipts are on the other. Everyone gets a receipt without exception. The easiest way for an employee to steal money is to not give a receipt, so the sale is never recorded for the restaurant. Even if you do trust your employees, you need to know the ultimate destination of your food, or all your careful record-keeping during your purchasing will come to naught.
Cost control benefits: prevent theft, estimate revenue, make it easy to forecast. The second triple-header.
9. Bank deposits/accounts payable
Last, you need to follow the money flowing into and out of your bank account. Audit your bank deposits: is all the money going in there that’s supposed to be? Audit your charge slips: who are you paying? Why are you paying them?
Cost control benefits: this is the most literal form of controlling costs, because this is dealing with money directly. It’s maybe the most boring part of the job, and certainly the least to do with food service directly, but ultimately cash is pretty important, to put it mildly. No cash, no business.
None of these cost control measures are revolutionary for foodservice operators, but they are vital. Whether you run a restaurant or a catering company, you need to pay attention to these elements of cost control, or you’ll find your profits disappearing before your very eyes.