ArtsAutosBooksBusinessEducationEntertainmentFamilyFashionFoodGamesGenderHealthHolidaysHomeHubPagesPersonal FinancePetsPoliticsReligionSportsTechnologyTravel

Reducing Food Costs in a Small Restaurant

Updated on January 16, 2018

Do Your Have a Small Restaurant?

Food costs can mean the difference between success and failure of a small business. I was a manager for a fast food chain in Texas and I learned a lot about food costs. I had one of the lowest food costs in the chain, it was always less than 22%. I wanted to share things that I have learned with small restaurant owners so that I may be able to help them succeed in their business. I truly hope it is helpful.

Food Cost % = (Beginning Inventory Purchases - Ending Inventory) / Food Sales

My dream is to open a small restaurant in South Dakota once I finish getting my degree in business management. I try to continue to learn about restaurants and how they are ran, so I will share more when I learn new things.

Know How to Price Your Menu Items at Your Restaurant

Pricing your menu items accurately at your restaurant is crucial to the success of your business. If you price items too high you will lose customers and if you price them to low you will lose money.

To ensure you are pricing properly you need to know how much each dish costs to make. To do this you will calculate the cost of every single ingredient in every dish. Say that you purchased flour flour at $4 for five pounds of and you need one cup for a recipe. There are 18 cups of flour in a five pound bag, so take 4 and divide it by 18. That gives each cup of flour a cost of .22 cents. Next you will divide that amount by the servings in the recipe to determine the actual cost of each dish.

Next, since you know what your dishes cost to make you need to do price comparisons in your area. Find restaurants that have items comparable to yours and see what the prices are.

Once you know both the price per dish, and comparable prices in your area, you can set your price for each dish. I suggest making your prices less than other restaurants in your area in the beginning so that you attract customers. Make your menus on paper so that it can easily be changed later.

Practice Portion Control to Reduce Food Costs

Each of your recipes and dishes will call for a certain amount of each ingredient, topping, or garnish. If you or your employees are not consistent with your dishes you can lose a lot of money, and also upset customers. Train all of your employees to measure out everything. It may be a tedious thing to do, but it will pay off for your small restaurant in the long run.

Example:

Two pound head of lettuce costs $1.50

You have set the price of your dish based on 3 ounces of lettuce, but each time the dish is made there is 4 ounces placed on it.

1.50 divided by 32 ounces means that each ounce of lettuce has a cost of .05 cents.

You have calculated for the lettuce to be .15 cents per dish, but it is actually costing .20.

Say that you make that dish 10 times a day seven days a week for a year. That means a loss of $182.50 a year for your restaurant.

That amount may not seem like much, but consider this happening to all of your menu items. It could easily cost your restaurant thousands of dollars a year if the portions are not controlled. Portion control is truly vital to your food costs.

The above calculations are just to give you an idea of how to calculate the losses you could have if your food costs are not controlled.

Inventory! Inventory! Inventory!

Keeping accurate inventory for your small restaurant is very important to your success. Inventory does not just help you control food costs it helps you monitor your supplies for theft or ordering. It is a necessity for your business. Make an inventory sheet that can be used at least once a day, and include everything from meats, prepared foods and condiments. If it has a cost you can determine the amount of inventory that your small restaurant has. To ensure your inventory is accurate you should purchase a POS (Point of Sale) system. It will help you track everything including inventory, food cost, labor, and more.

The Extras Can Greatly Increase Your Food Cost

Extra items such as condiments can add up in your restaurant. Ketchup packets can cost about .05 each, and other condiments can cost more than .15 each. If you give away 100 condiments a day that cost .15 it will add up to more than $5000 a year. I have been to fast food chains that would give me more than 10 pack for a small french fry. The funny part is that I do not even use ketchup on my fries. Can you imagine how much they waist on these item.

Now I do not suggest you charge for condiments at your restaurant because it can really run customers off. I have stopped going to restaurants because they would charge for ranch or other additional sides. If you lose a customer it will cost you much more then the few cents it costs for the condiments you offer.

Instead of increasing your food cost by giving your condiments away, or running customers off because you charge for condiments, find a middle point. Do no give condiments out unless asked for. If you do have salads you should start with a small amount of dressing, then provide more if the customer asks. If the customer does ask for extra condiments or dressings give them a reasonable amount.

Be conscience of all the prices in your restaurant. Everything costs you money, so you need to watch where your money is going. High food costs is one of the leading reasons small restaurants shut down. If you do not have knowledge of food costs do not open a restaurant until you learn.

Biggest Loss!

What do you think the biggest loss in restaurants is?

See results

New Guestbook Comments

    0 of 8192 characters used
    Post Comment

    No comments yet.

    working

    This website uses cookies

    As a user in the EEA, your approval is needed on a few things. To provide a better website experience, hubpages.com uses cookies (and other similar technologies) and may collect, process, and share personal data. Please choose which areas of our service you consent to our doing so.

    For more information on managing or withdrawing consents and how we handle data, visit our Privacy Policy at: https://hubpages.com/privacy-policy#gdpr

    Show Details
    Necessary
    HubPages Device IDThis is used to identify particular browsers or devices when the access the service, and is used for security reasons.
    LoginThis is necessary to sign in to the HubPages Service.
    Google RecaptchaThis is used to prevent bots and spam. (Privacy Policy)
    AkismetThis is used to detect comment spam. (Privacy Policy)
    HubPages Google AnalyticsThis is used to provide data on traffic to our website, all personally identifyable data is anonymized. (Privacy Policy)
    HubPages Traffic PixelThis is used to collect data on traffic to articles and other pages on our site. Unless you are signed in to a HubPages account, all personally identifiable information is anonymized.
    Amazon Web ServicesThis is a cloud services platform that we used to host our service. (Privacy Policy)
    CloudflareThis is a cloud CDN service that we use to efficiently deliver files required for our service to operate such as javascript, cascading style sheets, images, and videos. (Privacy Policy)
    Google Hosted LibrariesJavascript software libraries such as jQuery are loaded at endpoints on the googleapis.com or gstatic.com domains, for performance and efficiency reasons. (Privacy Policy)
    Features
    Google Custom SearchThis is feature allows you to search the site. (Privacy Policy)
    Google MapsSome articles have Google Maps embedded in them. (Privacy Policy)
    Google ChartsThis is used to display charts and graphs on articles and the author center. (Privacy Policy)
    Google AdSense Host APIThis service allows you to sign up for or associate a Google AdSense account with HubPages, so that you can earn money from ads on your articles. No data is shared unless you engage with this feature. (Privacy Policy)
    Google YouTubeSome articles have YouTube videos embedded in them. (Privacy Policy)
    VimeoSome articles have Vimeo videos embedded in them. (Privacy Policy)
    PaypalThis is used for a registered author who enrolls in the HubPages Earnings program and requests to be paid via PayPal. No data is shared with Paypal unless you engage with this feature. (Privacy Policy)
    Facebook LoginYou can use this to streamline signing up for, or signing in to your Hubpages account. No data is shared with Facebook unless you engage with this feature. (Privacy Policy)
    MavenThis supports the Maven widget and search functionality. (Privacy Policy)
    Marketing
    Google AdSenseThis is an ad network. (Privacy Policy)
    Google DoubleClickGoogle provides ad serving technology and runs an ad network. (Privacy Policy)
    Index ExchangeThis is an ad network. (Privacy Policy)
    SovrnThis is an ad network. (Privacy Policy)
    Facebook AdsThis is an ad network. (Privacy Policy)
    Amazon Unified Ad MarketplaceThis is an ad network. (Privacy Policy)
    AppNexusThis is an ad network. (Privacy Policy)
    OpenxThis is an ad network. (Privacy Policy)
    Rubicon ProjectThis is an ad network. (Privacy Policy)
    TripleLiftThis is an ad network. (Privacy Policy)
    Say MediaWe partner with Say Media to deliver ad campaigns on our sites. (Privacy Policy)
    Remarketing PixelsWe may use remarketing pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to advertise the HubPages Service to people that have visited our sites.
    Conversion Tracking PixelsWe may use conversion tracking pixels from advertising networks such as Google AdWords, Bing Ads, and Facebook in order to identify when an advertisement has successfully resulted in the desired action, such as signing up for the HubPages Service or publishing an article on the HubPages Service.
    Statistics
    Author Google AnalyticsThis is used to provide traffic data and reports to the authors of articles on the HubPages Service. (Privacy Policy)
    ComscoreComScore is a media measurement and analytics company providing marketing data and analytics to enterprises, media and advertising agencies, and publishers. Non-consent will result in ComScore only processing obfuscated personal data. (Privacy Policy)
    Amazon Tracking PixelSome articles display amazon products as part of the Amazon Affiliate program, this pixel provides traffic statistics for those products (Privacy Policy)