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3 Ways to Reduce Food Cost at Your Restaurant

Ariel Upton
September 22, 2020

It can be difficult to anticipate problems with your restaurant facilities.

After all, technical difficulties can pop up unexpectedly, and without a solution like 86 Repairs in place, your restaurant could struggle to fix the issue quickly—and affordably.

Though you may not be able to plan for a walk-in that’s stopped working or a kitchen leak, you can plan to control a major, recurring expense: restaurant food costs.

Menus might change, ingredient prices fluctuate often, and the future of indoor dining still feels up in the air. How can food costs be controlled under such uncertain circumstances?

Keep reading for a few ways to improve food cost controls in a time that feels unpredictable.

1. Take Inventory the Right Way for Accurate Food Cost Numbers

You may already know that careful inventory management is one of the keys to reducing food cost in restaurants. Knowing what you have on hand and how much it’s worth can minimize over- or under-ordering. It reduces food waste, ensures your par levels are met, prevents expensive last-minute purchases, and helps you accurately calculate your cost of goods sold (COGS).

However, manual inventory management is tedious and doesn’t account for fluctuating ingredient prices, which determines the exact price of your on-hand inventory. Legacy inventory management solutions aren’t much better; they’re a pain to implement, and an even bigger pain to maintain over time.

Eliminate these issues and get more control over food costs by using a modern inventory management solution! There’s inventory management software on the market that uses current, line-item data from your actual invoices to automatically calculate the value of goods at any given time in your restaurant. With this type of solution, you’re getting the correct data you need in order to make more informed purchasing decisions.

As an added bonus, some of these new inventory management solutions only need a one-time, virtual implementation—there’s no need to spend additional time and money on installation, and you can configure the platform yourself to better suit the way you and your team take counts.

2. Implement Better Recipe Management and More Profitable Menus

If you find your food costs have been rising, a quick solution would be to assign higher prices to your menu items and hope that it’s enough to offset the profit losses. However, this may drive customers to cheaper alternatives. Continually raising prices may not be a sustainable solution, especially if you don’t know the root cause of the increasing food costs.

Instead, implement a smart recipe management software solution. This software can help you manage plate costs utilizing line-item data from vendor invoices to automatically update the cost of each ingredient in a recipe, as well as the total cost of the recipe itself.

Quality recipe management software eliminates the time-consuming and complicated task of calculating plate costs manually. To build a recipe, all you need to do is pick and choose the ingredients from your inventory that make each menu item as well as how much of each is used, and the plate cost is automatically calculated from there.

Once the software has gathered enough data, you’ll also be able to see how plate costs change over time due to the changes in your inventory prices. Drill down into recipes to find the specific ingredients causing a decrease in margin. Because the values are updated automatically, you’ll be able to make quick decisions about altering or removing menu items before you lose too much money on them.

Recipe management software can also help you find more profitable menu items. High-quality solutions offer a drag and drop interface of ingredients and prep recipes so you can get creative in finding new combinations of items that lead to high-margin plates.

3. Track Vendor Changes Closely to Avoid Overcharges or Gauging

Ingredient prices may be out of your control—but you still have choices when it comes to who you buy those ingredients from. Vendors and their pricing models have a huge impact on overall food costs for restaurant operators, so it’s imperative to make sure you’re buying from the right partners.

Luckily, software has the ability to not only track how ingredient prices change over time, but also the prices for certain ingredients from specific vendors. You can see if you’re getting gauged without rhyme or reason, and also track if some ingredients are slowly increasing in price over time.

There are many empowering benefits to this vendor-specific data. You can easily compare costs across vendors, finding the consistently best prices across the board. You can also harness the data for contract price negotiations so your food costs fluctuate less frequently, and you can have a much better idea of what you can expect daily food prices to be based on a typical order.

3 Solutions Offered by One Software

Accurate inventory values, automatically updated plate cost calculations, and vendor price changes are all vital solutions for better control over food costs. And all three of them can be addressed with just one software solution: xtraCHEF.

xtraCHEF’s best-in-class invoice automation extracts and codes line-item details from incoming invoices. This data powers Inventory Management, Recipe Management, and Vendor Hub features within the platform so all areas of food cost control are going off the same dataset.

Food cost management is easier than ever with xtraCHEF. To see how it can work for your restaurant, request a demo with a product expert who will walk you through all the ways this software can help you survive and thrive during an uncertain operating time.

Not ready to take the plunge just yet? Get xtraCHEF’s free food cost management software, xtraCASH. You’ll be able to track prices and manage vendors as a starting step toward your best control over food cost yet.

This post was written by and published on behalf of Libby Peck, Content Marketing Manager at xtraCHEF.