Food Cost Management

Managing Your Food Cost

One thing that is inevitable in the restaurant business is how fast the cost of doing business is always rising. There is only so much that can be clawed back through price increases before there is a loss of traffic. The two major variable costs in your stores that are increasing the fastest are food and labor. The focus here will be to help manage your food costs as close to theoretical as possible without sacrificing quality. There are two pieces to that:

  1. Knowing what items have the most $ in waste.
  2. Acting on that information as soon as possible.

The good news is that we have developed a form with recommended triggers and follow-up steps that can have a big impact on your profitability. I think we all know that when staff are closing restaurants, they are usually in a rush to go home. That is why we kept this form to 3 questions, which is a 5-minute exercise.


Here’s how it works: Once the closing manager has their inventory done, they pull up the form and answer the following question: Is your food cost variance less than or greater than 1%?

If the answer is no, they submit the form, and no further action is needed. (The 1% can be changed to any threshold you’d like). Here’s what the completed form looks like with the acceptable variance:

 

If the food variance is over 1%, three dependent questions will pop up. The closing manager will have to fill in the three top variance items as measured in dollars. This is what that form will look like. This is an already filled out version:

 

 The key to closing the loop is to ensure the triggers are set up correctly. On the question that is >< 1%, the alert trigger should be sent to the above store person that is directly responsible for the performance of that store. In most organizations, that is the District Manager. The 2nd part of the trigger is where the rubber hits the road. It’s where you use Zenput to ensure that the store that is having the food cost issue is acting on it from the time they open the next day. Depending on how often you do your inventory, you can set a project up to be daily, weekly or monthly. Below is a snapshot of the form: 

 

The actions each of you can take will be up to you. Whether it’s a small white board in your food prep area, or food grade red stickers on the bins that contain the overused items, the key is having the night manager know the issues and closing the loop with the team that is opening the store.

 

This is also a good teaching tool. I am sure that all of you have had stores turn in inventories that had numbers that do not make sense. This forces your closing manager to look at the inventory to glean these numbers. It will also identify training opportunities as you find out those understand the numbers and those who don’t. Remember, in a store doing $1,000,000 in sales per year, 0.1 is the equivalent of $1000 and 1% is $100,000. Straight to the bottom line. Extrapolate that for 10, 50 or 100 stores? It’s a game changer!



If you would like to have this form template added to your Zenput account, please copy and paste the message below into the Chat function in Zenput and our Support team will add it for you: 

“Hi Support, can you please add the forms below to our account? Food Cost Accountability: Loss Prevention Pillar - 403995 & Food Cost Accountability Follow Up: Loss Prevention Pillar - 403931” 

 

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