6 Ways to Alleviate Rising Food Costs

Watching the bottom line is essential to operating a profitable business, and finding ways to alleviate rising food costs in your restaurant is crucial to success. With today’s escalating transportation costs adding to the variable price of inventory, it can be extremely difficult to monitor profit and loss areas without software that is designed specifically for the restaurant and food service industry.

The following list provides 6 ways to alleviate rising food costs in your restaurant for increased profits.

1) Monitor P&L Daily, Weekly and Monthly

The restaurant and food service industry requires you to vigilantly monitor your profits and losses in order to succeed. The average profit has decreased significantly from an average of 18% to 24% to an average profit of 6% currently, which means only a slight increase in losses can severely impact success and must be caught and corrected as soon as possible.

2) Eliminate Waste

Eliminate waste in the kitchen through every available means. Calculating portion costs and implementing portion control, and monitoring the results is one of the quickest ways to turn around losses. Perishable items that become outdated or are past their prime quickly drive up costs as does the practice of ordering items that are out of season. Weigh and measure portions consistently.

3) Keep Records

Keep records that include inventory and food waste, and personally take stock on a regular basis. All food, beverages and other items should be accounted for as waste can quickly eat up profits.

4) Order Food From a FoodService

Ordering food from a food service is typically less expensive than purchasing it at a nearby market. Over and under ordering can both add to your overall costs, although in different ways. A quick turn around is important in this industry, as perishable items go bad and frozen items can become freezer burnt or develop an old flavour. Orders that are short often mean filling in from local suppliers who not only charge more, but may not carry the same quality of food. 

5) Build Relationships

Relationships are important throughout the food service industry. Building a strong alliance with suppliers, employees and customers is crucial to your success. Knowing what specials are offered by suppliers can help with menu planning for increased profits. Employees who are preparing and serving the food need to care about the business and feel appreciated, while also understanding that it is a business. Customers walk through the door for a good meal and great atmosphere, meaning quality meals at affordable prices is important. 

6) Implement Inventory Control

Implementing inventory control software provides restaurant owners and managers with the tools they need to determine where waste occurs and to monitor inventory. Becoming pro-active with easy to use software can help you quickly determine when losses occur and why. Equally important, you will be able to plan menus and set prices quickly and easily based on current supplier costs as well as changes in operating expenses. 

Now it’s your turn. How do you control food costs in your restaurant? Leave a comment below.

For more info on Ideal Software’s Inventory Management system follow the link IdealStockControl

6 Tips for Controlling Labour Costs in the Restaurant Industry

Labour costs are one of the most important costs of running a successful restaurant. How do we determine its effect on business?

An effective gauge is the labour cost percentage: divide the amount owed for payroll with the amount earned in sales. The goal of any restaurant should be to keep this percentage below twenty percent, as anything more than that is too costly.

Here are six tips to keep that number from approaching anything unreasonable.

1) Cross-Training Staff

Cross-training your staff is an essential tool in combating unhealthy labour costs. By preparing workers to handle other jobs that need filling as necessary, the restaurant is able to better focus on keeping the number of workers needed in a given day low. When the prep cooks are able to operate the grill and the hosts can act as back-up servers, you eliminate the need for a specialized, diverse staff. The beauty of cross-training is that it maintains the same level of production quality your restaurant is known for without bleeding money on unnecessary labour.

2) Regular Audits

While cross-training your staff, it might be a good idea to also perform regular audits on their performance. By observing how each member of your staff operates during a given work-day, you can better assess their time management, as well as how to construct your schedule around certain parts of the day that are “down-times.”

3) Hourly Wages

Although restaurants normally operate on fixed wages, extra staff on busy nights should be shifted to hourly wage rates. As simple as it may sound, it will drastically improve the effect labour costs have on payroll when workers are only taking in a variable amount based on how much they’re actually needed on those intense work nights.

4) Adaptable Schedule

Along the same lines as monitoring staff performance for “down-times,” it’s also a good idea to regularly change the schedule as needed. Instead of relying on fixed work schedules, an adaptable schedule allows you to react accordingly to shifts in projected sales, as well as other important business concerns.

5) Resist the Urge to Panic Hire

“Panic hiring” is the temptation to hire the best from a pool of applicants with, at best, limited quality. It might seem like a good idea when your crew is overworked and undermanned, but consider the long term effects before making a hasty decision.

For one thing, it won’t do anything to directly address the labour cost problem, as you’ll be spending more to keep new recruits under your employ. The logistics of training them is another problem. If your crew is already overworked, adding an extra employee with no training will do nothing to increase your efficiency.

6) Over-Staffing

Just as it might be tempting to hire extra employees when the situation seems desperate, care should also be given when scheduling too many people for one night. Only schedule as many people as necessary, don’t attempt to account for any unforeseen consequences as that’s ineffective managing and will only increase labour costs in the end. Ultimately, this one shouldn’t be a concern if you’ve been following our other tips as outlined. 

How do you control labour costs in your restaurant? Leave a comment below.

For more info on Ideal Software’s Inventory Management system follow the link IdealStockControl

13 Food Cost Tips in 2013

It’s not cheap to run a restaurant, but food is one of the biggest costs associated with it. It is therefore of utmost importance to keep your food costs within an acceptable percentage to avoid financial hardship and prevent having to pass on the costs to your customers. Here are 13 tips on how you can achieve this:

1) Take Inventory Regularly

Making note consistently and regularly of your food and supply inventories will enable you to maintain better control of the overall use and the costs that come with it. This is particularly important for high-cost products like meat and alcoholic beverages.

2) Price Your Menu Items Accordingly

It is important that you charge a reasonable amount of money for the items on your menu. If you do this, customers will be more likely to return or recommend you to their friends and family, helping you to maintain a generous profit. Charging too little will give you a high turnover but very little profit.

3) Control Portion Sizes

It cannot be stressed enough that you should make sure to serve foods in reasonable portions. Over-filling plates means customers are likely not to finish the food, and that excess food ends up being wasted.

4) Follow Proper Food Handling Procedures

Make sure that you keep all foods at their recommended temperatures and cook them properly to prevent contamination and avoid waste.

5) Reconsider Garnishes

Garnishes may look good but aren’t usually eaten. Choose garnishes that are less expensive or avoid using them entirely.

6) Record Food Waste

On a chart, write down foods that were made improperly, spilled or thrown out. This helps you keep better track of inventory and makes it easier to monitor costs.

7) Be Consistent

Making inventory purchases consistently helps you to keep your costs steady and keeps you well-supplied.

8) Build Supplier Relationships

Building a rapport with your supplier’s means that they’ll become familiar with your regular orders and you’ll have a better idea of the cost. Regular communication can also help you find out about food quality issues or price changes.

9) Teach Employees to Care

Once employees see how your profits can affect their paychecks, they’re more likely to take waste, portioning and food quality seriously.

10) Buy Local and In-Season

Purchasing locally produced, in-season goods doesn’t just support the local economy. It can also save you money on your bottom line by avoiding the massive costs of cross-country or international shipping.

11) Shop Around

If you don’t like the prices of one supplier, it’s good to look around for a better deal. Buying wholesale whenever possible can also help.

12) Avoid All You Can Eat

While the availability of unlimited food for a flat rate can draw in customers, it can also result in a massive amount of waste.

13) Set Menu Limits

It’s great to have exotic or classy menu items. However, offering them all the time can significantly increase your costs. Consider offering pricier items only on certain days of the week.

Do you have any other food cost tips for us all? Leave a comment below.

Let us help you control your food cost with Ideal Software’s Inventory Management System,IdealStockControl. Contact us Now!

January 2013 Issue of Ideal Software's Niche Notes, our FoodService industry newsletter.

IdealSoftwareNicheNotesJanuary2013

December 2012 Issue of Ideal Software's Niche Notes, our FoodService industry newsletter.

IdealSoftwareNicheNotesDecember2012

7 Low Cost Ideas to Market a Restaurant

Successful restaurateurs create consistent turnover as well as many customers that frequent their establishments on a regular basis. This provides the basis for sustained revenue that allows a restaurant to succeed and grow.Many think that a restaurant that reaches this kind of success has had to put in years of hard experience, slowly building up a large customer base. However, that assumption is not always true. A number of inexpensive marketing tactics can generate a great deal of business for a food establishment very quickly.

These include:

1) Cultivate Word of Mouth Referrals

Happy customers are the best kind of advertisement. They’re free, they talk and they refer new customers to a restaurant. So encouraging folk to talk about their good experiences is definitely a must for any successful restaurant.

2) Email Marketing

Email marketing is another free or nearly free marketing tool that allows you to communicate with a large section of your client base at once. Through email, you can effectively disseminate information about special restaurant events and seasonal menus to those who have taken the time to join your email listing. As your business grows, word of mouth will spread about your special offers through your mailing list, which may lead to a larger client base.

3) Social Media Tools

In most cases social media accounts are cost-free, allowing a restaurant to create an Internet presence quickly. However, they do take time and mental work as good social media destinations need to be regularly updated with new content to keep people reading and paying attention to a restaurant.

4) Using a Loyalty Card

Many businesses have figured out that customers love to feel like they are receiving something for free. With the usual approach of having customers make five or ten purchases to gain a free coffee / meal / voucher, restaurants can generate a huge amount of return business.

5) Up-Selling

Do you want to upgrade that combo? Up-selling is a great way to generate marginal additional revenue on the same sales. People will buy a meal, however, by offering a larger meal for a bit more in cost, customers will feel compelled to buy it to take advantage of the “deal.” The cost of the food increase tends to be nominal versus the higher price charged for the meal upgrade. This is obviously only applicable to certain types of restaurants.

6) Use Coupons

Along the same lines of feeling like something was free, customers also love to take advantage of discounts as well. Coupons offer a real, tangible savings for a customer. In most cases people tend to buy more than one meal, eating with someone else, so even with a coupon the customer will bring in extra business. This option is very debatable, as some restaurateurs believe it will attract bargain hunters only, who will stop frequenting the restaurant as soon as the special is finished. Try starting off small and monitor the response.

7) Restroom Advertising

Restroom advertising and marketing tends to create cold leads mainly because people have nothing else to do but read while sitting in the restroom. Those few seconds of idle reading can catch someone’s attention with the small cost of a flyer, paying for itself and more with the first customer purchase. Combine the ads with special events, and the sales can grow exponentially with each customer’s reading.

Restaurant marketing doesn’t have to be a large, expensive affair. Good, effective marketing and advertising can be done cheaply, with very noticeable results in a short time. Smart restaurateurs combine a number of the above tools and more, spreading their nets farther to gain more customers. That in turn creates consistent revenue and sales that keeps a restaurant growing.

Do you have an 8th idea to add? Leave a comment below.

For more info on Ideal Software’s Inventory Management system for controlling food cost IdealStockControl

October 2012 Issue of Ideal Software's Niche Notes, our FoodService industry newsletter.

IdealSoftwareNicheNotesOctober2012

Portion Control and Food Cost

Portion control is an essential element of food cost and quality control. It reduces food waste, ensures a consistent and quality product, expedites food preparation and service, and has a big impact on food cost.

Any extra food added to the customer’s plate is money coming out of your bottom line.

While an extra ounce of soup or a handful of cheese may seem insignificant, these amounts added up per dish over an extended period of time are costing you thousands per year in additional food cost. Excessive portions also contribute to food waste, both in terms of plates coming back half-full and over-ordering of stock; that is your profit going into the garbage every day.

The best way to get a handle on food cost is to keep an open dialogue with all of your staff, assess if and where waste is occurring, and have a mechanism in place to ensure that each portion is consistent in every dish that leaves your kitchen.

Assessment:

When you create your menu, you should also allocate portions for each menu item and price them accordingly. The general rule of thumb is that each dish on the menu should cost 30 – 40% of the selling price in order to cover expenses and make a profit. Lack of consistent portions makes it impossible to assess the true cost per item. Talk to your servers and your dishwashers. They can provide information about what is coming back to the kitchen. If certain dishes are constantly coming back half-eaten perhaps you need to rethink that particular dish and alter it or eliminate it from the menu altogether, or adjust your portion sizes.

Prevention:

A successful restaurant is a team effort, and it is important that all of your staff are on the same page and have the necessary equipment to ensure product quality.

- Provide pictures of each plated item illustrating the correct portion sizes and plating.

- Provide a chart that lists the correct portion of each item in all food preparation areas.

- Pre-portion condiments, sides, and sauces.

- Order pre-portioned stock where practical and make sure that all bulk items are portioned out and appropriately labelled and stored as soon as possible.

- Have and an adequate amount of the correct sized storage containers, ladles, and scoops for each menu item as well as a variety of measuring cups, spoons, and scales.

These measures not only help to ensure less waste, they also speed food preparation and service, especially at peak times. This makes certain that your customers get what they expect every time they dine: consistently good-looking, tasty food, in fair portions, at a reasonable price.

Love of good food and the ability to share it with others is the main reason you opened your doors in the first place; proper food portioning practices help to ensure that they stay open.

September 2012 Issue of Ideal Software's Niche Notes, our FoodService industry newsletter.

IdealSoftwareNicheNotesSeptember2012

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August 2012 Issue of Ideal Software's Niche Notes, our FoodService industry newsletter.

IdealSoftwareNicheNotesAugust2012

7 Tips in Determining Restaurant Menu Content and Prices

There is one question that every restaurant owner has to address when setting up their business, and that is “How do I determine my restaurant menu content and prices?” While there are a number of considerations that can help you in answering this question, you need to be aware of the fact that it is by no means a static question.

In other words, setting the cost of the items on your menu (or resetting the cost of them) is something that will need to be done multiple times over the course of your establishment’s lifespan. But where do you start? The seven tips listed below should help you in getting started.

1) Determining COST:

In order to correctly determine the prices on your menu, it is important to be able to price your menu items properly. To do this it is imperative that you understand how to determine the cost of your products. This includes everything from wholesale product costs to delivery fees (when the item first shows up in your establishment) to cooking costs as well as wages and overhead in order to determine exactly what it costs for you to be able to provide this particular dish. While it may seem like a lot of work to do for every item on your menu, you may well be surprised to find out how much you are underselling. Once you have determined the costs you can then (taking into account your competition of course) determine a profitable price point.

2) It's All About the Price Point:

When you are starting out in the restaurant business, a good rule of thumb is to take the cost of each dish (see tip #1) and then double it or triple it (In South Africa, an acceptable cost of sale for food overall should be 32- 40% and beverage 25 – 35% giving an overall cost in the 30 – 37% range- if other costs such as labour and rent are below 10% each, you will still be able to be profitable with a food cost in the 45% region). Of course you will want to take into account what your competitors are charging for the same or similar items. In fact, when it comes to things like specialty desserts and coffees it is not unusual to see a 300% markup. So don’t be afraid to add a little extra. If you track your sales you will quickly be able to determine what the public is willing to pay and can adjust your prices accordingly.

3) Understanding the Price Barrier:

There is a point above which most customers will not go. This point is called “The Price Barrier.” While you may find some individuals who will buy the item, the bulk of those who eat with you will not touch it as it is not a good deal for them. While you may be able to get away with a slightly higher price if you specialize and produce something with a little extra (a steak with all the extras for example) most of your middle income customers will stay below this barrier.

4) Knowing Where to Display your Prices on the Menu:

The art of displaying your menu prices is one that depends a great deal on your individual establishment. While having a standard dish/price column may be expedient for diners to determine whether they can afford a dish, if you’re selling upscale foods you may want to have the price listed below the description of the item to make sure your customers read about the food before dismissing it out of hand.

5) Take Demographics into Consideration:

While considering the demographics may seem like something you would expect from a corporation of chain restaurants, know this; being able to determine what the class of diners that your establishment appeals to can help you determine what you should set for prices, and even how your menu should be designed. Upscale clients tend to pay more on the whole and prefer reading about their food before they decide whether or not to order it as opposed to those for whom price is the primary concern.

6) When Food Doesn't Sell:

It’s a horrible feeling when your food isn’t selling. However, there are ways to ensure that even the worst failure of a dish brings you some sort of return. One of the best ways to do this is to make the dish a “special” by placing it in a high visibility area of your menu, having your servers bring it to the diner’s attention, and by lowering the price (or even offering 2 for 1 deals) in order to get it moving. You can even take advantage of your Twitter or Facebook page or send out special email runs to regular customers in order to advertise your special. Who knows, you might have a sleeper hit brewing that just needs a little nudge!

7) How Prices Affect Establishment Image:

Keep in mind that choosing the price for your menu is a direct reflection on your establishment. It’s true! As much as we might not like to admit it, upscale establishments almost always cost more than middle or lower class establishments. The higher the prices, the fancier your clientele is going to expect your establishment to be. Can you deliver? Do you have the ambiance and the service to back up the high menu prices? If so, then go ahead and raise your prices; however, be prepared to lower them if your clientele decides that there is a point above which they cannot go.

These seven tips are by no means the only factors to be considered as you determine the pricing of your menu. However, by following the advice listed above, you will most certainly see a change in the profitability of your establishment. In a few short months you will see positive changes that you might never have thought possible. All it takes is a little time and attention to detail.

For more info on Ideal Software’s Inventory Management system for controlling food cost follow the link IdealStockControl

July 2012 Issue of Ideal Software's Niche Notes, our FoodService industry newsletter.

IdealSoftwareNicheNotesJuly2012

9 Tips for Choosing the Best Catering Staff

Whether you’re looking for a staff to prepare and serve food at a family function or an exquisite wedding reception, following some tips will help you to hire the best staff for your soiree.

1. Narrowing the Options:

If you live in a highly populated area, dozens of food service providers might exist. Ask for recommendations from family members and friends. You should also check out reviews via online websites / searches to see how the company fares in the grand scheme of things.

2. Menu Options:

When you’re hosting a braai/barbecue, you probably don’t want a company that only makes heavier foods best prepared in an oven, such as turkey and mashed potatoes. On the other hand, opting for a platter of sandwiches and potato salads is not the best idea for an elegant wedding reception. Make sure the style of the company matches your needs.

3. Cleanliness:

Visit the physical location of the food service staff and assess how clean the space is kept. If it’s dirty in there, chances are your food is not going to be of the cleanest and freshest variety.

4.Dietary Restrictions:

When members of your group have certain dietary restrictions, you must make sure the cooking staff can accommodate them. For example, if certain members of your party keep Kosher, see if special Kosher meals can be prepared for them. If some individuals are allergic to shellfish, make sure that none of the food is cooked near or with any shrimp, clams, crabs and so forth.

5. Cost of the Service:

One of the biggest concerns for many people when they are hiring individuals to staff their party is the cost. You want to know what the cost of the food is going to be. Be honest about your budget. In the event that you’re unable to afford the particular company, ask if they have packages that are more suitable to your budget.

6. Value of Customer Input:

Once you begin working with a company, you want them to value your input as opposed to just taking over the process. You may have a specific sauce recipe that you’d like them to follow. Ask how much input you’re allowed to have before booking the company.

7. Size of the Staff:

You also want to make sure that the staff can handle the party. Ask how many servers and cookers will be on staff the day of the party. If you’re having a 100 person function, one server is certainly not going to be enough.

8. Tastings:

Before booking with a food service company, find out if you can do a tasting. The only way to know if the food truly pleases your palate is to try it out!

9. Go With Your Gut:

It may be cliche to say “Go with your gut.” However, gut feelings are often right. As a human being, you can often pick up on people being dishonest or trying to swindle you. When you’re preparing for a party, you need to feel comfortable with all of the vendors, so choose a company about which you have a good feeling.

The food service staff is just one of the elements involved in planning that perfect party. Picking the best one in the area ensures that this area of the event will be a big hit that people talk about for years.

For more info on Ideal Software’s Inventory Management system follow the link IdealStockControl

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