How to Reduce Food Cost in Your Restaurant

Owning a restaurant business can be successful and extremely fulfilling. However, food costs can become an issue when not dealt with properly.

Having the knowledge of when and how to reduce food costs can help boost business productivity and even lend a hand in increasing revenue. Unnecessary waste from food is a major contributor to high food costs, as well as not utilising your inventory processes, bulk purchasing and your own haggling skills.

Let's check out the top tips on how you can reduce food costs in your restaurant and increase your business profit margin.

1. Perform Frequent Inventory Checks

The number one way to reduce food costs within your business is by first reducing waste produced from overproduction and overstocking. Reduce food waste by having a strict inventory schedule.

Perform frequent inventory checks to ensure food levels are at a reasonable level and that you are not overbuying on products that will go to waste, such as perishables or quickly expiring ingredients.

2. Track and Measure Current Levels of Food Waste

In conjunction with your inventory process, tracking how much food you buy and don't use is integral to cutting down on food costs.

Start a logbook and track food prices versus the food that is thrown out in an effort to manage food costs. Keeping track of how much you spend on food that is wasted allows you to decide where extra money can be saved or put toward struggling sectors of the business.

3. Compare Prices From Multiple Vendors

Of course, wanting the best price for the ingredients you need is a priority. But, in an effort to not tip the scale of quantity versus quality, comparing prices is a great way to work out what works best for you.

Having a healthy food cost percentage allows your restaurant to thrive, with excellent ingredients for a price that fits within your budget.

4. Negotiate Better Prices With Your Current Suppliers

After comparing prices from multiple vendors, it may be in your best interest to stick with your current suppliers and negotiate for a better price. This way, you can save money and not go through the hassle of changing suppliers (and potentially risk the quality of stock you're purchasing!).

5. Implement Portion Control Measures

Just as you can cut down on food costs from intake and purchasing, you can also cut down on food costs when giving out the final product. A large chunk of food wastage actually comes from overloading a customer's plate.

When building out your menu items and deciding your food budget, make sure to take portion costs into account. Better yet, implement portion control measures to ensure that you are saving as much as possible while still keeping your customers well-fed!

6. Use Bulk Purchasing to Take Advantage of Discounts

For the basics that you need in the kitchen, go for bulk buying to lower those food prices. Taking advantage of discounts through bulk buying is a great way to reduce overall food costs, especially when buying staples or basics that will last a long time.

For flour, rice and other food items that have long expiring dates and are used frequently in your kitchen, make buying in bulk a priority to reduce food costs.

7. Implement First In, First Out (FIFO)

The number one rule for any inventory or stock room is FIFO- First In, First Out! Make sure the ingredients you buy are used in the order that you purchase them. This will ensure nothing will expire, rot or go to waste sitting at the back of the shelf.

8. Utilise Inventory Management Software Technology

Food cost percentage can be more easily calculated if you invest in Inventory Management Software Technology.

Tracking food prices, wastage and increased/decreased usage of certain ingredients can be done all in one place. This allows for ease of workflow and, of course, a more accurate determination of what your business' actual food cost is.

9. Analyse Sales Data

After taking all the steps to reduce your food costs through inventory, supply and budget, it's important to consider what the customer is actually buying. Analysing sales data is the most efficient way to work out what menu items are most profitable and what dishes are working the best in your restaurant. This can be done easily through POS systems for restaurants that can pull data from POS integrations and identify the most popular menu items.

Adjusting pricing or adapting your menu is a great way to reduce food costs, as it ensures that your customers are consuming what they most enjoy at an economical price point.

10. Source Seasonal & Local Ingredients

Sourcing seasonal ingredients is a guaranteed food cost reduction. Fresh food from local sources is always a plus, as it takes longer to expire and is, of course, more quality for your customers.

There's no downside to using seasonal and local ingredients, with it being cheaper and fresher for consumption. And you'll get to support local farmers and producers in the process as well!

11. Offer Daily Specials

If you've got a surplus of ingredients in your stockroom, or leftover prepped food, offering a daily special that incorporates those ingredients is a great way to reduce food waste. Combine food that would usually go to waste with fresh ingredients at a reduced cost for that little bit of extra profit.

12. Educate Your Staff

Finally, education is key! Talking to your back and front of house about the importance of reducing food costs and food wastage (especially for the cooks!). Offer training when it comes to inventory processes, including tracking and measuring food waste. When building out your menu with your chef or cooks, make sure to prioritise education on food seasonality, waste management and portion size control.

Reducing food costs is not only important for the business to thrive, but it means that any food wastage that is reduced promotes a sustainable and eco-friendly kitchen.

For many restaurant businesses, food wastage and increased food costs can contribute to difficulty in increasing profits. To ensure that your business thrives, taking steps to reduce your food costs could be the best way to increase your profit margin. As everyone says, every cent counts! 

For more insights into saving time and money, take a look at our Hospitality Operations Webinar on Demand here: