How to Reduce Food Costs & Increase Revenue


Restaurants and grocers can reduce food costs and increase revenue by following a set of best practices. Here are the top tips to decrease food costs and prevent food waste.

 Introduction to Reduce Food Costs

56% Americans report eating out at least two to three times per week, while 6% say they eat out every day. With more people appreciating the perks of dining out, restaurants are seeing an uptick in customers. While this is good news, it does mean that restaurants need to order more ingredients from suppliers to accommodate the influx of customers.

Over time, wholesale prices have continued to rise which increases the cost of food. Here are best ways to cut food costs, reduce food waste, and increase the bottom line.

1. Reduce Food Costs - Check Inventory Regularly

Check inventory once a week to know which ingredients and supplies are used the most. This will determine what necessities should be ordered more frequently than others. This can decrease the restaurant's overall food cost percentage and optimize inventory management.

2. Reduce Food Costs and Join a Purchasing Group

A purchasing group consists of two or more restaurants that form a partnership to purchase supplies in bulk. A purchaseing group is a money saving method to acquire discounts for larger orders.

This is an ideal way for restaurant business owners to compete with chains who have larger purchasing power.

3. Monitor Food Waste to Reduce Costs

When checking inventory, make sure to use a chart to maintain an accurate record of any food waste incidents.

Write down any returned food, spilled food, burned food, and dishes that are half-eaten due to how large the portions are. This can be utilized as a learning tool so staff know to be more careful not to spill or burn food.

4. Don’t Overfill Plates to Reduce Food Costs

Utilize portion control, or the proper quantity of ingredients in preparing a dish. If standards have not already been set for portion control, make a point to do so. Watch for dishes that frequently come back with extra food left on them.

Use any observations to adjust portion sizes in the future, like customers regularly asking for take-home boxes for certain dishes. Work with management to refine menu options and avoid offering too many dishes that are oversized.

5. Track Food Prices

Food prices tend to go up when an item is low in inventory. This can be a result of being out-of-season or due to unfavorable climate conditions. For example, a drought in California decreased the output of broccoli, tomatoes, and lettuce, resulting in a price increase for those vegetables.

If ingredient prices are too high, temporarily remove the associating dish(es) from the menu until external conditions improve.

6. Prep More to Reduce Food Costs

Putting in extra work to prepare food minimizes costs, maximizes usage, and decreases expenditures.

For example, ask suppliers for bone-in chicken options instead of fillets. Though it takes more work to remove the bones and prep the chicken, it will save the restaurant money and reduce waste because fillets tend to be more expensive.

7. Know Food Grades to Reduce Food Costs

The USDA gives a food-grade to communicate the overall quality of items sent to restaurants The different food grades include prime, choice, good, standard, commercial, utility, cutter, and canner.

Restaurants should decide which main ingredients can be purchased from a lower food grade. It is not always necessary to buy the highest grade for all ingredients.

8. Compare Suppliers and Negotiate to Reduce Food Costs

Negotiate discounts with current suppliers or shop around for better pricing with another company.

If the preferred choice is to stay with a certain supplier, then use the competitor's costs as leverage for a better rate.

9. Work Locally and Seasonally to Reduce Food Costs

Build business-to-business partnerships with local food suppliers. Local suppliers may be able to offer free delivery or discounted food prices if the restaurant, in turn, provides a worthwhile proposal, like free advertising.

Seasonal produce will always be more inexpensive because in-season food is at the peak of its supply and is less costly to farmers. Continuously renewing the menu to include seasonal items will help reduce food costs and keep customers interested as new dishes appear on the menu.

10. Organize the Kitchen to Reduce Food Costs

Create a first in first out policy where any produce that goes into the refrigerator will be used in the order of the oldest ingredient first. This will maintain an efficient use of produce and will minimize waste.

11. Donate Leftovers to Reduce Food Costs

Donating leftovers to a recognized charity is tax-deductible on an IRS income statement. Boost the restaurant's reputation and save money on tax bills by donating leftover restaurant food to a worthy cause.

Having a socially-conscious and environmentally aware reputation will also attract new customers and build the restaurant's brand.

12. Reduce Food Costs and Use Software to Boost Efficiency

Utilize a restaurant management software system to streamline food business operations.

Intuitive software works with various in-house restaurant technology systems to track and manage inventory.

Many software systems can integrate with mobile devices so managers can connect with suppliers and manage food waste incidents conveniently from anywhere.

13. Price Items Properly to Reduce Food Costs

Price menu items reasonably so customers will be more apt to return. This will help offset any costs from food waste incidents, so the restaurant can still make a profit. Here are some considerations when pricing menu items-

  • Direct costs encompass preparing, serving, and storage. It includes the portion sizes, prep time, and the cost to purchase the food.
  • Indirect costs involve how much the food is worth to customers.The ambiance and food quality contribute to the indirect costs.
  • Price according to the perceived value of the food. For example, an upscale steak house can charge more for its menu items because it is considered a fine-dining establishment and its food is higher quality.
  • Consider prep time, labor costs, and how much work is needed to serve dishes to customers. The more effort that is put forth, the more that dish's value will appreciate.
  • Remember that food costs increase or decrease depending on external economic conditions, droughts, and seasons. Don't overprice items but remember that the restaurant still needs to make a profit.
  • Research how the competition prices similar menu items. The customer needs to see a perceived benefit that justifies paying more for a similar menu item.

Photo by timolina
Previous Post Next Post