Operations, Part 3 of 6: Food Cost

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Lets face it, when it comes to running a business one inventively finds themselves staring at two crucial number- Labor and Food cost. In part 2 we touched on labor (click here for the full article) so now we shift focus on food cost.

Both if managed properly can be kept at bay but more times than not expenses can slip away and before we know it you’re looking at over 40% food cost and everything seems to feel out of reach. Luckily, you know better than that! Right? After all, you are here reading this article. Check out a few points a few pointers below to help address this ever changes market:

  • Remember the 80/20 rule. As a general rule, about 80 percent of your food costs come from 20 percent of your items, says Reinstein. Negotiate good deals on these core items, he advises, but don’t overlook the other items. “I’ve seen restaurants that grossly overpay on the other 20 percent.”
  • Feature affordable quality. Track food prices; on the individual commodity level, the USDA expects declines in beef and eggs this year after sharp increases in recent years, according to the NRA’s 2016 Forecast. Meanwhile, beef prices are expected to continue their rise. Review your menu and recipes for affordable alternatives. For example, use pollock or swai rather than the more costly Atlantic cod, recommends Bruce Reinstein, chief operating officer for Consolidated Concepts, a purchasing partner that focuses on supporting multi-unit restaurants with leveraged buying and consulting. For meats and poultry, consider less expensive cuts, like chickens thighs, which pump up your profits while going easy on customers’ wallets.
  • Compare apples to apples. When bidding out items, be careful that you’re making a true comparison between items. For example, if you’re comparing the prices for a case of tomatoes, factor in any differences in yield, urges Reinstein. Just because one vendor offers a case for less, doesn’t automatically make it a better deal.
  • Root out hidden costs. Beware of hidden costs like freight charges, says Reinstein. Be sure to negotiate these upfront. Audit your invoices to ensure that you pay for only what you receive and that no extra charges are tacked on.

Full list can be found here

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