FoodRazor Blog

Exploring F&B industry and operational efficiencies

As a restaurant owner, dealing with high food costs may be one of the most significant issues that you encounter. Many different situations trigger food price to rise. Some, such as the seasonal increase in ingredients prices, are external.

Others may be internal factors such as waste in the kitchen or staff theft. Regardless, if your profits are shrinking, it may be a signal that your food cost is out of line. Before slipping into the red any further, here is a quick refresher course regarding food cost control methods you can apply now for immediate results.

What Causes High Food Cost?

After talking to a wide range of restaurant owners and operation managers around the island, we've nailed down 3 potential causes that might be responsible for hiking up costs.

#1 Not tracking raw ingredients' price regularly

Having been in the food service industry for a long time, you know how difficult it is to keep up with price fluctuations— especially with fresh produce and vegetables; since we import almost everything, the price can be quite volatile.

Using FoodRazor, you can track all the variances through daily email notifications, which removes the stress of having to check market prices manually.

We notify you daily regarding any price changes in your ingredients so you can immediately contact your supplier and negotiate for a better price. Those few cents saved can amount to tens of thousands of dollars when you account for the amount you ordered in the long run!

Good to know: What is the standard variance percentage?

Answer: It depends on many factors— but solely using a food cost percentage as the most critical evaluation of operation is utterly inadequate. Food cost percentage does not pay the bills! You cannot take food cost percentage to the bank; margin and cash in the bank are what pays the bills. It is virtually always better to have a high margin of profit, even if it means a poor food cost percentage.

#2 No proper relationships with suppliers

One of the main reasons restaurant owners get stuck with higher than average food costs is because they don't take the time to choose the best food vendor, nor do they develop a proper connection with them. While the process may be time-consuming, the reward is well worth the effort.

Much can be solved by forming better relationships with suppliers, including food wastage. If restaurants aren’t intimately involved with the suppliers or aware of the sources of their food, it’s unlikely they’ll be able to understand how important it is to make sure nothing goes to waste.

Good to know: Every year, more than 1.3 billion tonnes of food is wasted. There are 2.2 billion obese people and more than 800 million people around the world who do not have enough food to eat.

#3 Not tracking daily/weekly records of your costs

Keeping up with your food spend can be challenging when your bookkeeping is only done at the end of the month. Unfortunately, finding yourself going over budget can be a recurring problem in this scenario.

FoodRazor's dashboard gives clear insights into the health of your food spending, all in a quick glance. As an owner, you can easily maintain control over your budget even when accounting for different locations, as all transactions are consolidated and viewed in one place.

With this air-tight control over the operations, you can quickly identify the areas of income leakage— or exactly which items you are over buying and underutilizing.

Good to know: 95% of restaurateurs agree that restaurant tech improves their business efficiency.

Creating and maintaining stable processes— and dealing with roadblocks— takes time, energy, and focus. However, the benefits far outweigh the expense of effort. And, with the help of an online-based platform like FoodRazor, you'd be surprised how simple it is.

Even if they require a certain amount of upfront and continued commitment, efficient processes will surely remove so many headaches for you and your team.