Offsetting Rising Labor Costs
As labor expenses rise in Washington, managing your food costs is more important than ever
With Washington’s minimum raise increasing in January and employee benefits expenses on the rise, restaurants are under more pressure than ever to manage their bottom line. “As restaurants are asking themselves how are they going to manage the increases in labor costs, we’re hearing from a lot of our customers that they don’t want to jack up menu prices,” explains Sysco Business Resource Consultant Ricky Webster. “But how do you do that?” Managing your food cost is a good place to start. Here are three tips from Ricky to keep your food cost in line, and drive profits up.
1. Know Your Numbers
“We find that a lot of the smaller restaurants we work with have been very relaxed managing their food cost. They don’t know what their food cost number is or more importantly what it should be.” According to Ricky, a profitable restaurant typically generates about 30 percent food cost. “For larger organizations with more buying power, that cost is probably going to be closer to 25 to 28 percent.” As you write your menus, it’s also important to know the food cost for each menu item. “If you already buy from Sysco, there’s a tool available that will do the math for you. All you have to do is select the item and select the portion size and it does the math for you. It’s a much simpler way to approach breaking down a menu and figuring out recipe costs.”
2. Take Inventory
“Managing food costs breaks down to doing a monthly inventory and sometimes a weekly inventory,” Ricky says. You need to know what you have, and you need to track waste or leakage. “So you know you sold 10 portions of steak this week, but you are missing 14 steaks. Where did those four go?” He recommends implementing a waste-tracking log. “Doing this will force you to take a deeper look at the cost of running your business.”
“The only difference between a good restaurant and a great restaurant is consistency.”
3. Keep it Consistent
If your recipes are consistent, you’ll not only offer a better dining experience, but you can more accurately project your food costs and eliminate waste. There’s a quote from Thomas Keller that Ricky really likes. “The only difference between a good restaurant and a great restaurant is consistency.” “For example, you need to make sure that everyone on your staff makes your mashed potato recipe the same way,” Ricky explains. “If one person is adding two extra cups of cream and another is using cream cheese instead, you’re spending more money. Lock in your recipes, complete with their food costs, then train your staff to deliver them and you won’t end up with wildly fluctuating food costs.”