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How to Keep a Lid On the Rising Cost of Food

Food ain’t cheap. And it seems like prices are only going up, and up … AND UP. No, it’s not just you. According to a 2015 report by the USDA Economic Research Service , restaurants have experienced an overall greater Consumer Price Index (CPI) annual growth rate of 3 percent. Food costs are rising for […]

Food ain’t cheap. And it seems like prices are only going up, and up … AND UP.

No, it’s not just you. According to a 2015 report by the USDA Economic Research Service , restaurants have experienced an overall greater Consumer Price Index (CPI) annual growth rate of 3 percent.

Food costs are rising for a variety of reasons. Shifts in consumer preferences, changes in food and beverage trends and the weather extremes have created the perfect storm of price increases. For the restaurant industry, coping with these costs is a top priority.

The easiest and perhaps most logical thing to do is to increase menu prices. And that’s certainly a path that a lot of restaurants take, especially when everyone is experiencing the rising costs across the board.

But for consumers, that jump in price could be hard to swallow. And the last thing you want to do is price yourself out of the market or drive guests away.

There are, however, other ways restaurants can curb today’s rising food costs. Here are a few strategies to consider implementing across your operations.

Reduce Food Waste

A restaurant can produce 150,000 pounds of garbage each year. The pre-consumer kitchen waste, which could be incorrectly prepared food, spoiled food, trim waste, or simply overproduction, constitutes an estimated 4-10 percent of purchased food, becoming waste before it ever reaches the table.

High cost, highly perishable items – or food considered to be the “center of the plate”- should be inventoried every day. This does a couple of things. First, it ensures your staff has enough of a popular and perishable menu item in stock to meet demand. Second, it makes it easier to spot discrepancies before it’s too late.

Managers (or whoever is in control of keeping a lid on food waste) might also monitor what servers or bussers are clearing. If there’s a dish that tends to have a lot of one ingredient left over, then you can probably afford to make your portion sizes smaller.

“Human error, miscalculations, and variance inaccuracies are issues that managers and operators have simply tolerated. Over time, these tiny errors add up, sending dollars down the drain or the dumpster.”

Establish Regular Inventory Discipline

Managing inventory in a restaurant is a discipline. What’s this discipline we speak of? It’s an activity, exercise, or a regimen that develops or improves a skill. Managers (or whoever is on inventory patrol) should have a prescribed set of activities to follow day-in and day-out. This includes things like the best time of day to take inventory or how often quantities should be recounted and compared to par levels.

For example, you might decide to count inventory on Sundays when inventory levels are lowest.
Once you start practicing better inventory habits, you’ll start to notice trends. For instance, after two weeks of daily counts on perishables, your sous chef might notice there is a large amount of salmon on hand.

Armed with that knowledge, she could do things like:
(1) Order less salmon
(2) Incentivize servers to push more salmon entrees
(3) Run a special on salmon on Saturday or Sunday.

When it comes to food, there’s no “going back” and fixing it. Establishing better habits now is the most effective way of nipping problems in the bud.

Revisit Your Menu

We’ve already established the fact that passing a cost increase can be an unforgivable act in the eyes of your customers. So before you go and smack a 15 percent increase on beef, consider altering your menu slightly. Here are some other ideas:

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  • Decrease portion sizes on newer menu items
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  • Change recipe ingredients
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  • Change the quality of certain menu ingredients
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  • Alternate seasonal menus or specific seasonal menu items
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Ditch Inventory Spreadsheets

Restaurants have relied on spreadsheets to manage inventory for a long time. That’s just how inventory’s been done. But there are problems with a spreadsheet. Human error, miscalculations, and variance inaccuracies are issues that managers and operators have simply tolerated. Over time, these tiny errors add up, sending dollars down the drain or the dumpster.

The best restaurants strive for as little error, waste or theft as possible and they do it with an inventory management system. True inventory management systems offer advanced features around COGS and theoretical inventory analysis. But not everyone needs that level of sophistication. Mobile inventory applications, like HotSchedules Inventory, are made for smaller independent or regional chains that want to move away from spreadsheets, but don’t quite need the bells and whistles of the enterprise back office systems. At the same time, mobile inventory applications are powerful in their own right, helping to speed up the pace of counting, reduce error, categorize inventory according to storage location and can even show on-hand inventory versus par quantities.

Setup Loss-Prevention Notifications

When dealing with an inventory management solution , accurate on hand data shows an on-hand value that can be compared to a theoretical on-hand value. The delta between these two figures is the true indicator of missing product. It could also be an indicator of overstock if recipes have been shorted or substituted for other product.
Inventory software makes it easy to set up business rules around inventory because all of your items are in the system, par levels are already established and the system is being updated in real-time. So if you’re bacon is consistently under what you projected to use, the system will notify you to investigate the actual problem.

In this dollars and cents business, that can add up to huge savings over the course of a year.

Need an Inventory System You Can Count On?

HotSchedules Inventory is an easy-to-use counting app built to help independent restaurants and regional chains.

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