A half-pound of food is wasted per meal in restaurants from either customer or kitchen waste, and around 85% of unused food in American restaurants is thrown away. That is an enormous cost to both restaurant owners and society as a whole. With more than 42 million people who are labeled as food insecure, the restaurant has both a financial incentive and a duty to reduce food costs and waste.
If we had to boil down how to reduce restaurant food costs into one phrase, it would be this: be proactive. You have to give yourself the time to think critically about how your restaurant is running. If you don’t, then you will be ruled by your restaurant and not the other way around. The best way to adopt this mindset is to get specific and never let operational analysis get pushed aside by daily activities. They are of equal importance and should be treated as such.
We’re going to cover 20 ways for you to cut food costs in your restaurant. Identify 3-5 that resonate the most with you and make a specific plan to implement them. Start by doing what you can and build from there.
#1 Set smart, short, and actionable goals around food costs
Dwight Eisenhower said, “plans are worthless, but planning is everything.” If you don’t set goals to begin with, then you will never succeed. The act of planning itself puts your plan into action. Even if that plan changes dramatically during implementation, if you set short, specific, and achievable goals that you can track against, you will already be ahead of the curve.
Example of a bad food costs goal: Cut inventory costs.
Example of a good food costs goal: Reduce the inventory costs of our top 3 selling items by 10% in Quarter 1 by being smarter about our purchase orders and prep.
#2 Identify the top 5-10 products you buy and make a daily count of those key items
One of the best strategies for reducing food costs is to keep a close eye on the highest impact ingredients. Make a list of the most critical ingredients in your kitchen and count the inventory and their depletion rates daily. See how your employees interact with them, observe when and why they are being thrown away, and look for any and all ways to reduce your waste surrounding these items.
#3 Educate your employees on when food should and shouldn’t be thrown away
Employees without kitchen experience are bound to make errors in judgment around expiring food. The window of time in which you can use an ingredient depends on the dish it is being served in and the type of storage that the item is being held in. Make sure a component of your training is around when, and when not, to throw ingredients away.
#4 Label anything and everything
Your restaurant has to get addicted to labeling. Once a prepped sauce or item is left unlabeled, it is much more likely to be thrown away. It can’t be trusted without a date! Keep sharpies and tape within easy access of all storage locations and build labeling into the culture of your kitchen.
#5 Monitor your purchase orders over time
Assuming demand is rising at a steady rate, you should be able to get better at your purchase ordering. Make a calendar task to check on your purchase orders once a week and see if there are any issues you need to be aware of. You may find that chefs are double ordering when it isn’t necessary or ordering in smaller increments that increase your costs when you could be bulk ordering instead.
#6 Lock your liquor up
Theft is, unfortunately, a natural expense all restaurants have to deal with. Liquor is among the most susceptible to theft, so keep a key and only let the manager have access to it. You can also reduce food theft by adding in a code of ethics and empowering your leaders.
#7 Keep clean draft lines to reduce wasted beer
Dirty lines pose a health risk and make it harder to pour a good draft, resulting in more and more beer going down the drain. Make sure your draft lines are cleaned regularly to get as much beer out of a keg as possible.
#8 Evaluate your menu offerings and eliminate high-cost, low-profit menu items
Set aside time every month to take a close look at what is selling and what isn’t. What items are both expensive to produce and aren’t selling? What types of ingredients are you throwing away over and over because they are only used in 1-2 underselling dishes? Know when to call an experiment quits and move on.
#9 Set a food budget and track your purchases against it
Food costs usually make up around a third of menu prices, and your first step should be to figure out your average food costs over the previous six months. Once you have a number, make an ideal budget and work toward it. Then, each month, track how you are doing against that goal. For example, you may find that you spend almost 40% on food and want to reduce that to 30%. Implement changes to affect that percentage and track your progress.
#10 Use smart inventory management to better predict your needs
Smart inventory management and modern POS systems can help alert you to dynamic inventory changes. If a particular dish is selling like hot chicken at a Titan’s game, then a smart system will let you know about that spike. There is even technology that will track your inventory in real-time and estimate the amount left based on the dishes sold that use those ingredients.
#11 Pre-portion your expensive items during prep
If your employees always seem to be putting too much ahi tuna on your salads, then determine an official portion size by the ounce and measure it out in prep. Identify your most expensive ingredients and start with those.
#12 Evaluate your supply chain for saving opportunities
As ingredient costs rise, you should be consistently evaluating how much, and for what reason, you’re paying for ingredients. Take restaurant owners Kim and Diaz’s approach, for example: “I’m gonna use dairy from a local ranch, but I might not use organic dairy from a local ranch. It’s a perpetual conversation [of] how to get my guests the most bang for their buck,” Diaz said.
#13 Simplify your supply chain by working with as few providers as possible.
Delivery rates add up. If you are really pleased with one provider but haven’t started using them for other ingredients that they offer, why not? Take a look at their prices and see if you can save by consolidating your supply chain.
#14 Make dishes that can use discounted produce.
So-called “misfit” produce can be used in so many ways and bought at a discounted price. Any dish where that produce will be blended or chopped is fair game. It’s merely an aesthetic preference, after all!
#15 Pay attention to customer food waste and cut portions if appropriate
Take a week and weigh your customers’ food waste. If you notice a third of your food being thrown away plate after plate, then it’s time to reevaluate your portion sizes. Take the time to educate your employees on this as well. Explain to them how their decisions directly impact your bottom line and empower them to make smarter decisions around portion sizing.
#16 Use composting to make a restaurant garden
This isn’t for everyone, but using food waste as compost to grow a spice or pepper garden is a wonderful way to use waste. This will also serve as a marketing mechanism for your restaurant. Today’s consumers love local, and there’s nothing more local than a backyard garden at your restaurant.
#17 Get creative with expiring produce
Day-old bread can become croutons. Old bananas can become banana muffins or banana bread. Observe what you’re throwing out and see if you can make a new product from it.
#18 Designate waste leaders and give them a pay bump if necessary
The hardest part about making changes at restaurants can be getting your employees used to the extra responsibility. Start by making sure your shift leader is on board with your food waste initiatives, and negotiate a pay bump as an incentive if you have to. The money you could save by reducing food waste will pay for the pay bump and more.
#19 Simplify your menu
Simplifying your restaurant’s menu can do wonders for your inventory management and kitchen efficiency, and many restaurant chains are exploring this idea:
“If you can streamline your menu, you can do so much more to improve your efficiencies, the quality of the product, the order time for the customers. If you take a look at the mono-concepts like In N Out, Chick-fil-A and Raising Cane’s, they have very, very small menus. They do really high volumes for all of these reasons.”
#20 Look for simple substitution opportunities
If you notice yourself throwing away a lot of a particular item or consistently have a surplus, check for other items in the menu that you could substitute it for. For example, you could sub arugula for spring greens, cranberries for raisins, turkey for chicken, etc.
Menu substitutions are a great way to speak to the growing vegetarian and plant-focused population as well. Try offering a vegetarian or vegan meat substitution for your popular dishes to boost profits.
The bottom line
Restaurant success always comes down to the details. The collection of waste and cost reduction habits your restaurant has will make or break your restaurant. In the game of razor-thin margins, every bit counts. Again, don’t try to do all of this at once, but take a few of these ideas that you think will have the biggest impact and make a plan to implement them. Start today and don’t look back!
Make 2020 your restaurant’s most profitable year by staying ahead of the competition.