Is My Food Cost Too High?

Some of this month's emails have questions regarding a food cost benchmark. Generally, you will meet many operators who have been trained to cost their menu items with all garnish, sides, and sauces. They then multiply the cost by a factor of 3 to achieve a 33% food cost. This method won't maximize profit.

If you use a 33% food cost target, how do you treat monthly price fluctuations, shifts in guest preferences, and a myriad of other variables which impact the food cost formula?

Use the food cost target as your projected food cost but take a hard look at the actual results. Your food cost is too high if you haven't implemented tight portion control. Maybe your garbage bags are loaded with spoiled food due to ordering too much product. Your cost is too high. Try to locate all the food cost issues in your restaurant. These are opportunities to improve.

Your food cost percentage does depend on your menu pricing strategy. Your pricing factor may not be 3 times the recipe cost. There are sophisticated menu pricing models which are designed to increase gross profit in dollar terms. Before the ink on the new menus is dry, the recipe costs used in your model will have changed.

Use your current food cost as the guide. Look for ways to improve. Create simple action plans. Improve by executing the plans.