food and beverage underground

Why Isn't My Food Cost Right?

“I have to get my food cost down, it’s killing me.” Time and time again I hear the same old story from Chefs and Kitchen Managers;
Well, they are right, but that doesn?t mean there numbers are coming in too high, even though the owner, or accounting people are beating them up over it.

30% 30% 30%!!!

I know that that magic 30% keeps popping out of everyone’s mouth, but where did it come from? The owners know it, the managers know it, and your teachers knew it even the textbooks talk about it. Well let me tell you one thing that you absolutely have to know about that 30% number that keeps getting thrown up in your face; it’s wrong! That’s right, I said it, and to drill it into your head so you can spread the news I’ll tell you again; it’s just wrong!

I can’t tell you how many misguided soles at their business trying to find out where they are losing their money when the numbers for the period come in and they find out they are running a 36% product cost. First thought, “who’s stealing from me,” then the focus shifts to waste and then to where's the product. So many have to jump on the defense and start a no win argument with half of the staff creating a hostile environment. They never seem to look at the number and smile, but maybe there is a good reason for them to do just that!

Let’s take a look at a fictitious full service restaurant and we will take a couple of their entrée selections. First we have a chicken pasta dish which is on the menu for $13.95, next a rib eye steak for $18.95 and a live main lobster for $29.95. The cost of the chicken dish is $4.00 giving it a 29% cost. The rib eye costs $7.00 to produce giving it a 37% cost. The lobster tops the list costing $12.00 to put out giving it a whopping 40% cost.

Well, I guess it’s a pretty simple fix for all of you that want to get to that magic 30% standard; train your servers to push the chicken!!!! Right? If you sell the chicken dish all day long you will get those numbers down! But oh how wrong you would be. Taking a closer look no one will benefit from down selling! Yes, you should run a better cost, but not only will the servers be short selling their tips but the establishment will be hurt too. Why? Well if you look at the same examples in a different light you’ll see that the chicken dish costs you $4.00 and sells for $13.95 leaving the restaurant a profit of $9.95 per plate. The rib eye costs $7.00 and sells for $18.95 profiting $11.95 per dish, and the lobster at a cost of $12.00 and selling for $29.95 leaves a whopping $18.00 to the restaurant.

# Sold $ Product Menu Price Food Cost Profit
Chicken 1 $4.00 $13.95 29% $9.95
Rib Eye 1 $7.00 $18.95 37% $11.95
Lobster 1 $12.00 $30.00 40% $18.00
Total 3 $23.00 $62.90 37% $39.90

Having been in the business for over a quarter of a century I think I have seen it all, but the one thing I still haven’t come across is the bank that lets you deposit percentage points instead of dollars. As an owner I would take the $18.00 per plate profit and just smile from ear to ear when someone looks at me like I’m an idiot when I feel proud of being able to run that 36% cost.

Need to compare

I’m certainly not telling you that when your costs trends up that you shouldn’t be all over it like a wet blanket, but I am telling each and every one of you that running an ideal food cost for every period and comparing it to your actual food cost should be your first step. Running an ideal food cost is a simple process. The ideal food cost in the above example would be 37%. To run your ideal cost on a spread sheet like the one above simply go to our resources section find our restaurant essentials and download the ideal food cost spreadsheet (our resource spreadsheets are no frills, straight to the point resource for you to use as you desire and are completely free.)

Now you need to take a good look at that number and compare it to the actual food cost you came up with for the period. The difference between those numbers is your problem that needs to be worked on, not some imaginary number the industry seems to have stuck in their heads!

Go from Kitchen Prep List to Reducing Food Coat

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