Controlling Food Costs
Controlling food costs starts with inventory organization and control. Over and over we have
found that reducing inventory levels and organizing food storage areas will significantly reduce
food costs. It is a simple axiom: When you have excess and disorganization you have waste.
THE BEST GUESS INVENTORY/ORDER SYSTEM
This system works best when your chef/kitchen manager has been able convince you that
ordering is a complex procedure that you the manager/owner should not get involved in. Only
someone with his/her many years of experience can understand the obscure secrets of food
purchasing. The system works like this:
There you are: Inadequate side station stocking and poor food storage organization caused a
panic in the middle of the lunch rush resulting in a panic purchase of excess inventory, without
checking prices, which resulted in overstocking and spoilage.
- In the middle of the lunch hour rush a waitress runs out of crackers. (Side station stocking
- She rushes to the store room but does not see the crackers because two cases are hidden under
other things. (Poor organization problem?)
- She then rushes to the chef, who is busy on the line, and tells him you are out of crackers.
- The chef was to busy to leave the line and check the storeroom.
- That afternoon whatever salesperson walks in first will get an order for crackers. (Forget price,
we need them now!) And because we ran out the chef doubles the order to four cases.
- Now we have six cases of crackers that will sit in the storeroom for who knows how long. (Your
money is sitting on a shelf earning nothing)
- Murphy's Law says it is only a matter of time until someone stacks a couple of cases on #10
cans on top of the crackers.
- Chances are good that before you can use up all those crackers, you will have one or more
cases of cracker bits and crumbs.
The really scary part is that this is standard operating procedure for many restaurants.
In many instances we have eliminated 20% to 50% of the shelves and storage areas to
encourage the kitchen to keep their inventory lean and mean. In some cases of extreme
overstocking this alone has resulted in reducing food costs by more than 10%.
A rule of thumb we have found to work well is: Order to bring your inventory up to a two order
period par level. That is: If you order an item daily, such as produce, order enough to have a two
day supply including the inventory you have on hand. If you order dry stores weekly, subtract
the inventory you have on hand from what you expect to use over the next two weeks and order the
With this simple concept you should never run out of product, and never have more
than a two order period inventory on hand. Check out the inventory/order system chapter for
While state Health Departments have gotten tougher in this area, many restaurants still loose
product to freezer burn, contamination and spoilage because of improper storage procedures.
Even worse are those restaurants who loose customers because they serve less than fresh
Want to know what improper storage is costing you?
- On the sly, after all your employees have
left, take an inventory of everything in your freezer and walk-in that is not properly wrapped,
covered or date marked.
- In the next day or two take a second inventory to see how many of these items are still not
properly stored. Check for rotation to see if the oldest items are used first.
- Now cost out the items that are still improperly stored. Multiply this by 365 days. Bet that number
gets your attention.
- Give your kitchen crew a break by assuming that half of those items will be used up before they
spoil. Chances are that even half of your annual spoilage cost will get you thinking what you
could do with all that extra money.
Advance preparation can have a critical impact on food costs. Just as you would not stop to
drain the swamp when the alligators are nipping at your butt, your cooks will not worry about
portion control when deluged with orders during a rush.
Advance preparation and portioning not only saves food cost dollars, it also results in a more
efficient kitchen, with a more consistent product and faster service to your customers.
Helpful Hint: A quick check of the previous weeks menu score provides a good
guide as to how much to prep for a given day and meal period.
Regularly scheduled requests for bids/quotes from both your current suppliers and new
suppliers can loop some more off your food costs. This is an area where you can delegate, up
to a point.
- Have one or more of your employees make the calls, using the specifications from your
inventory/order form. If a new supplier offers a good price, ask for samples.
- Do not let the employee change your specified supplier on the inventory/order
form without your approval.
- Review the price offered and check the quality of the sample before changing purveyors. If you
have any doubts, check their service and the consistency of their quality with other restaurants
in your area.
- Have a receiving procedure that checks price, quality and quantity at your door. One way is to
post your inventory/order form on a clipboard at the back door. The person receiving the delivery
certifies that price and quantity of the delivery matches the inventory/order form as well as
checking for quality. Exceptions can be noted on the back of the form, and
signed by the delivery driver, with management follow-up.
- A double check is to have your bookkeeper check invoiced prices and quantities against quoted
prices and amount ordered quantities on the inventory/order form
THE LOWLY DISHWASHER
Being the lowest in the pecking order in a restaurant, the dishwasher's potential for profit
maximizing is often overlooked. More than anyone else he/she can tell you what is coming back
from your dining room. How much of your food costs are going into the trash because of
excessive portions or just because customers do not like an entree, vegetable or condiment?
Changing a garnish, eliminating a vegetable or reducing a portion may allow you to reduce the
menu price, making you more price competitive with the same profit.
THE BACK DOOR
The back door is where a good portion your profits can go, if you let it.
- The most obvious step is to keep your back door locked. This will require you to install a door
bell outside for deliveries. In addition local fire codes may require an emergency exit bar on the
door. Be sure it includes an alarm that must be deactivated by management or designated
kitchen personnel before the door can be opened.
- Keep the area outside your back door clean and tidy. As much as is practical you want to
eliminate places where stolen food product can be hidden until the thief gets off shift.
- Check your garbage. It is a common trick to wrap a couple steaks up and hide them in the out
going garbage. You may also realize considerable saving in lost linen and silverware costs by
checking the garbage.
- If you are designing a new kitchen, locate your freezers and walk-ins, where you keep high cost
items like meat and seafood, as far from the back door as possible. Make it harder to sneak
HOW TO MAKE IT ALL WORKABLE
Just like everything else in your restaurant, you are the key to making food cost control work. We
favor the two person spot check and prosecute method.
The Two person check:
The spot check:
- Designate whoever has authority to open the back door to check all garbage before the
dishwasher carries it out. If the inspector does his/her job theft will be reduced by requiring two
- This is where management insures the inspector is doing his/her job. This is also where
management gets their hands dirty and spot checks the garbage at unexpected times. This
clearly establishes you are committed to controlling back door theft. It also validates that you do
not ask your employees to do anything you will not do.
- You may choose not to go through the hassle of calling the police and actually prosecuting a
thief. What you can do is:
- If your cook/garbage inspector catches a dishwasher taking food out with the garbage, establish
that the dishwasher is actually the thief and fire him/her. After a severe reprimand the first time,
the same dishwasher caught taking food out again is reasonable proof of his/her guilt in our
- If you wait outside and find stolen food in the garbage after your cook has inspected the
garbage, fire the cook.
- It is very possible the cook who allows stolen food to go out the door is negligent rather than a
thief. No one likes to root through garbage. By firing this cook you will insure that the next
cook/inspector will really check the garbage.
- Help your cook/inspector. Provide heavy vinyl or rubber gloves and apron for use while
inspecting the garbage.
A COUPLE TRICKS TO REDUCE BREAKAGE AND SPOILAGE
- The very first step in breakfast preparation should be to set a supply of eggs out to temper, even
before the grill is turned on. Egg yokes are less likely to break if the egg is cracked at room
- If you use frozen portion cut steaks, layer the steaks in a shallow hotel pan then cover them with clean
cooking oil. With this simple procedure:
- The steak's cooler shelf life will be doubled. And, you will have better tasting steaks because
the oil prevents the steaks flavorful juices from draining off.
- When broiled the oil seals in the steaks flavor, without leaving any after taste.
- With a longer shelf life you can keep more steaks defrosted, eliminating the need to defrost in
a microwave, or attempt to broil a frozen steak if you sell more than expected.