Why Is My Restaurant Food Cost So High?
"Food cost is high" is the most common thing we hear from owners. It's also the least useful, because it doesn't tell you what to fix. To fix it, you have to break it apart.
Start with actual vs. theoretical
Theoretical food cost is what you should have spent based on what you sold, if every plate went out exactly to spec. Actual is what you really used: beginning inventory, plus purchases, minus ending inventory. The difference is your variance, and it's money you can get back.
To get theoretical, every item on your menu needs a costed recipe, and every POS button needs to be linked to one. That's real work up front, but once it's done, the report runs itself every period.
The usual suspects
- Portioning. An extra ounce of protein on every plate adds up fast. Scales and portion tools on the line fix it.
- Waste. Over-prepping, poor rotation and dropped product. Track it on a waste sheet so you can see it.
- Vendor price creep. Small increases on dozens of items. Review your top 20 items by spend every month.
- Menu prices that haven't moved. If costs went up and prices didn't, the margin went somewhere.
- Bad counts. If inventory is counted in different units every time, your numbers are fiction. Count items the way you use them.
- The stuff nobody costs. Garnishes, sauces, to-go containers and condiments. They belong in the recipe.
Measure each category against its own sales
Food cost should be food purchases against food sales. Liquor against liquor sales. Beer against beer. When you lump them together, a great bar month can hide a bad kitchen month.
Then engineer the menu
Once you trust your costs, plot every item by popularity and contribution margin. Promote the high-margin favorites. Re-price or rework the popular items with weak margins. Cut what nobody orders. This usually moves cost more than any purchasing change.
A one-point drop in food cost on $2 million in food sales is $20,000 a year straight to the bottom line.
We build these systems for clients through our cost control consulting, usually inside the inventory and POS tools they already have.
