FoodRazor Blog

Exploring F&B industry and operational efficiencies

The new year often inspires us to aim for a fresh set of goals. For us in the industry, such goals include improving your restaurant's food cost. Your food cost is a determining factor for many elements of your restaurant, but, most importantly, it dictates your profit margin and subsequently your menu planning decisions.

If lowering your food cost is one of your ambitions for 2019, these 9 fresh ideas and timeless reminders will help get you on the right path, so you can keep your customers happy and coming back for more.

1. Choose the right supplier

One of the main reasons restaurant owners are stuck with higher than average food costs is because they haven't taken the time to choose the best food vendor. While the process may be time-consuming, the reward is well worth the effort.

Don't be tempted to settle for the first supplier you meet with. Often, their offers sound too good to be true— and they are. Instead, meet with at least three or four other vendors before making a final decision. Most vendors are willing to accept a lower profit margin if you do a more significant amount of business with them. Some will even undercut other vendors just to secure your business.

2. Prevent Waste

Tackling food waste can be approached in many different ways, all of which are vital to apply to your restaurant if striving to improve your food cost. Also, note that food which is purchased and then thrown away gets factored into your food cost percentages and will definitely strike up the average.

Below are three ways to prevent food waste at your restaurant:

3. Check Inventory Regularly

Keeping track of inventory at your restaurant is not just a recommended practice, we believe that it is a required one. Attempt to take inventory at least once a week, if not more, to understand your kitchen stock better. Your inventory is directly related to food cost. Understanding how much is being spent every day on food is essential.

4. Cost the Menu

It makes perfect sense that when you are attempting to improve the food cost at your restaurant, one of the first things you do is cost your menu. Food costing is a procedure that needs to be done regularly to ensure price consistency across the board. Despite how the tedious nature of this task, it is absolutely necessary to be able to assess which of your dishes are the most profitable and which are the least.

FoodRazor makes this job easy. As you take photos of your invoices and upload them to the platform, the systems automatically digitise all your transactions by line items— recording unit price, quantity, and product names.

To make your menu costing process more convenient, you only need to download the "Product Price Movement" report. This grants you access to the shifts in cost of average cost of all your ingredients. The report also takes your Free of Charge (FOC) from your suppliers into account; this way, you can be sure to calculate the menu costs based on real prices & quantity, allowing for a much higher degree of precision.

Food costing can bring alarmingly high food costs to your attention. This knowledge allows you to make a decision about whether a dish gets to stay on the menu or if its time for it to go. Once you have determined which of your items are too pricey, you can begin to look for alternative suppliers for each ingredient— or, alternatively, new dishes to replace those using these ingredients.

5. Work with your Staff

Work with your Staff

Sometimes, inadequate food cost comes down to your staff members. Make sure that you have supplied your team with proper training, equipment, and a platform to speak up about any difficulties they may be encountering.

6. Record ALL Sales

This might sound obvious, but improperly recording sales at your restaurant could negatively affect your food cost. How?

Let's assume your restaurant generates 10,000 SGD in sales every week and operates at 35% food cost, this means the restaurant is spending 3,500 SGD per week on food. If for some reason, 10% of your sales aren’t being recorded, this pushes up your food cost to 38.8%.

No dish should ever leave the kitchen unless it has been added on your POS.

7. Lookout for hidden cost

Way too often, restaurant operators ignore the costs regarding their most commonly used ingredients, which can surprisingly end up costing the most. A few examples of these ingredients include rice, frying oils, seasoning, and cooking butter.

The reason these are often overlooked is that, relative to other ingredients, these are usually the cheapest items to source. Most restaurants fail to consider how commonly they are used.

Once you’ve realized the issues these items often pose, you can begin to look for cheaper options or change the recipes and procedures to either use a more controlled amount.

On FoodRazor you can source for new suppliers as easy as typing down the product name.

8. Beware of operation cost

A significant cause of increasing food cost is what we will refer to as “operational costs"— the costs associated with operating a restaurant. These include everything from rent to promotional discounts that you may offer your customers.

While these costs are often random, you can’t entirely omit them from your food cost calculations. However, you can take shielding measures to prevent these kinds of incidents from happening, and engage in precautionary measures to ensure that a promotion doesn’t drive up your food cost at the expense of bringing in a few more diners.

These tips will be useful to your restaurant— or at least spark some food for thought. Here is a recap of the 8 things you can start exploring to crunch down your food cost and run your business better.
(Note: Try to keep it between 30-35%, or lower).