How do you Manage Restaurant expenses?

Most restaurants are unable to manage their finances and experience losses as a result of their inability to keep their restaurant costs under control. Inability to control costs might result in significant losses and, in the worst-case scenario, the restaurant’s closure.

Restaurant cost control is critical since it helps you to pinpoint the source of your spending and take corrective and preventative measures to maintain a good expense-to-finance ratio.

In a restaurant, the two biggest expenses are food and labor. In this, we’ll go through how to effectively track, manage, and limit food and labor expenditures.

1. Inventory tracking and management for restaurant food cost control

Tracking and controlling your inventory is the first step in restaurant price control. It’s critical to keep track of daily stock-ins and outs, as well as actual consumption during the day. Monitoring the difference between the Ideal Stock and actual physical stock will help you determine if your restaurant is wasting too much food.

A variance of 3-5 percent is considered normal; however, anything higher than that indicates excessive wastage or possibly misappropriation at your establishment.

In this instance, a clever Stock and Inventory Management System comes in helpful because it allows you to track Variance, generate real-time data, and set re-order levels for particular stock items. In this manner, you avoid the risk of over-buying or under-ordering by only ordering the items when they reach a particular re-order level.

Based on your restaurant’s stock consumption habits, the inventory management system may also assist you to estimate your exact stock requirements. In this manner, you can avoid unnecessary waste caused by over-ordering.

2. Using credit to purchase raw materials to cut costs

You may keep your restaurant expenditures down by limiting your cash transactions and making all of your purchases on credit through the restaurant’s account. In most cases, raw materials purchased in cash are in smaller quantities and can be more expensive than those acquired in bulk.

3. Using Yield Management to Analyze Stock Requirements

You may adopt Restaurant Cost Control and drastically lower your food costs by just paying attention to a minor element that is often overlooked but equally important, namely Yield Management.

Yield management is an important aspect of food cost control since it determines how much raw material will be required to create a certain food item. Raw materials should be ordered and purchased with the item’s yield in mind.

The amount of raw meat brought to your restaurant and the amount of raw meat that can be consumed in a meal, for example, are two completely different things. When placing an order, keep in mind how many portions a specific order of raw materials will supply.

4. Portion Control as a Means of Reducing Waste

Wastage manifests itself in overproduction and large quantities, resulting in rising food expenditures. To manage the price, you should have the equipment to measure the portions and follow strict methods to control the portion size. Over-serving of food can result in greater food prices and waste, thus proper plating is also important.
We recommend making a tracking chart based on the following parameters:

  • The Customer Has Returned the Food
  • In the Kitchen, Food Has Burned
  • Food Spilled on the floor or in the Kitchen
  • Extra portions that are discarded

You can take corrective actions depending on the results once you start measuring these metrics. If consumers are returning food, for example, you should either increase the taste and quality of the item or start reducing the portion size given. If food is frequently burned in the kitchen, you should either improve your chef training or consider upgrading your kitchen equipment.