We’re seeing some quite disturbing food cost figures in some of our clients’ figures lately, and judging from some of the calls and email enquiries we’ve received, many businesses at various market levels are suffering the same problem.
Chefs are not trained to manage
I have some empathy for the Chefs in the struggle to reduce their costs, because most Chefs have never been trained to understand what options they have to correct food cost blow-outs. The reality is Chefs are trained to cook during their apprenticeship and only get cost control training if they are lucky enough to be mentored by a Head Chef who has those skills. My observation is if they have been trained in a corporate hotel environment they are more likely to have received cost control training than if they have worked in the independent restaurant or café sector.
There are many variables to manage in a kitchen
Containing food cost percentages to an acceptable level is the result of managing quite a few different variables — starting with menu design, through purchasing, goods receipt, storage, preparation and portion control. To give you a rough target we believe food cost percentages should range between 27 – 33%, depending on your market level, and your type of business. I’ve seen them as low as 19% (in a basic pub bistro) and as high as 57% (in a very temporary fine dining restaurant).
It is worth noting that every per cent your food costs are beyond what is reasonable takes a corresponding per cent off the owner’s profit, which is likely to already be fairly marginal. I know this is stating the obvious, but I’m aware that many owners seem to avoid conflict to their own detriment. Call me capricious but I’ve always believed that if it is a choice between me or the staff being unhappy, I’d rather pass it to them. The reality in many restaurants is that the Head Chef is earning more than the Owner anyway.
Putting pressure on your chef may not work
Simply placing pressure on your Chef to get food costs down may not get you the result you want. If they haven’t been trained to understand how to react you are likely to either get smoke and mirrors or an inappropriate increase in selling prices, which could easily push you further toward pricing yourselves out of a very competitive market.
Numeracy is required
There are common issues my consultant chefs find when we do kitchen audits. First, we have struck a disturbing number of chefs who cannot work-out the percentage of one number to another. These people are really a problem for us as a reasonable level of numeracy is a pre-requisite for any Chef above Chef ‘d Partie level. Stepping back, this is a basic recruitment problem, not a cost control problem.
Variable cost ingredients
Second, many are unaware of how to cost an ingredient that varies wildly in price, according to supply. We often see menu item costings that are seriously inaccurate because nobody is keeping track of invoice prices against the recipe costings, and key ingredients have sustained steep price increases, without anybody realising it.
Further down our list we are constantly fighting the tendency of some chefs to purchase premium ingredients in circumstances where they are not necessary and do not add to a customer’s increased perception of the product. All this does is unnecessarily inflate food costs, without adding to revenue.
Guesstimating is not likely to be accurate
Another issue is the making of assumptions about the cost of ingredients without accurate costing being actually done. Reduction sauces are the common culprit. A recent client estimated 5c per serve for a sauce, where we believed the real cost was nearer $1.20. You render a herd of cows down to Vegemite and the results are going to be a tad expensive.
Portion control is critical
Do not discount the perennial problem of portion control, either. The tendency of staff to put a ‘little extra’ on to a plate is quite common, especially when the supervision and training of kitchen staff is not as thorough as it needs to be. ‘How’s a coupla prawns or a few scallops gonna hurt?’
Sadly, many of the chefs we deal with have been blissfully unaware that they have to take GST off their menu prices before they work out food costings. Basic stuff, but often overlooked.
Strictly manage freebies
Finally, how do you account for freebies and give-aways? Every time you give an item or a dish away you have to sell up to four more to recoup your loss. You can easily find yourselves producing lots of food for no gain if you don’t have tight control.
To put all this into context, your chef controls the largest amount of money flowing through your business when you add the food cost, the wage cost and the overhead cost of running a kitchen together. Best they be able to manage money, staff, stock and environment — as well as the production of food.