Profit Generating Formula = Food Cost Control

By M Dave and Aditi Gupta

The food & beverage industry is witnessing a surge in the number of small to medium restaurants. Though, the Chef’s are highly capable, it has been discovered that a talented chef also needs to inculcate the art of costing a plate of food besides gaining culinary expertise. Most of the hotel management institutes do not emphasize much on financial and profit modules until much later in their curriculum. This is reflected in the lack of knowledge about accurate financial control among the aspiring chef’s. One needs to realise that with severe competition in the restaurant industry one can thrive only if they have a right mix of a talented chef, consistent access to quality ingredients, dependable suppliers and a cosy ambience with provides a magic touch of personal customer service. However the success of all the above-mentioned elements can only be measured if the restaurant is making profits and meeting its targets, which is the underlying principle of any business. Hence it’s reasonable to state that any business in the food & beverage industry has to be cost conscious. The window of profit margin in the industry has been depleting with every passing day with increasing competition and prices mixed with customer’s demand of higher quality food at a lower price tag.

So the question is whether the restaurant managers are missing the trick and facing the challenge of costing? Most chefs can estimate roughly what a plate should cost however it is impossible to estimate the exact cost of the plate without appropriate tools. For example: – A chef might be able to guess the cost of a bowl of salad but what about the garnish? Often the sprinkle of oils, dressing, spices which are forgotten also has an implication-on the total cost of the salad. This leads to underestimating the cost of a very simple dish like salad which -can have higher repercussions on the overall P&L of the restaurant.

This boils down to one point that if you need to make the profit in this business your cost of plate needs to be accurate. Good financial control will include complex calculations like taking into account the food wastage/shrinkage which reduces your gross profit; at the same time it is equally important to ensure good inventory and stock rotation. All of the above sounds very obvious but, if one lack training to think this way just because it was not focussed when they studied how can one be expected to make the profit in this business?

For those managers who run and manage their restaurant but lose revenue due to underestimating the cost of plate of food the market have various options to help you. We get various EPOS, inventory management and stock taking; menu engineering and accounting software which are budget friendly. Why not try it?  Yes, there would be a small cost to your business in the start however the return on investment mixed with profits will make you overlook the initial investment.

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