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Controlling food Costs

Controlling food Costs. How to get the most of your money. Tips on Lowering Food Costs. Raise prices to adjust to new food costs. Cost out menu & price items accordingly. Control portion sizes. Minimize & track waste.

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Controlling food Costs

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  1. Controlling food Costs How to get the most of your money

  2. Tips on Lowering Food Costs • Raise prices to adjust to new food costs. • Cost out menu & price items accordingly. • Control portion sizes. • Minimize & track waste. • Spot-check prep staff ensure pre-cut portions weigh what they are supposed to. • Link the chefs pay to a pre-set food cost %. Set up an incentive deal for the chef. • Set up purchase order system. • Negotiate prices with vendors for bulk buying. Take vendor discounts when offered. • Organize storage room & keep inventory to a min. • Purchase based on a budget.

  3. Standardized recipes • A standard yield: expected qty. of food that results from a standard recipe. Stated in the total quantity of food the recipe produces, such as 3 gallons of clam chowder & by the number of portions it produces, such as 48–8 oz. bowls. • A standard portion: consistent qty. of product served to each person each time it is served. • Portion control tools: scoops, ladles, a standard serving bowl, or count promotes consistency and customer satisfaction, and aids in insuring a business’ profit.

  4. Determining Standard Food Costs • Cost per Unit Method • Yield Test • Cooking Loss Test • Standard Recipe Using 1 or up to all of these will help you determine your plate cost.

  5. Edible Portion • Edible portion is the form in which the product is served. Little/nothing needs to be done to prepare a product in EP form. • Ex: purchasing prepared cheese, cake that needs only slicing; a case of 6 oz. chicken breasts needing only to be cooked; or a case of 24–10 oz. bottles of sparkling soda need only to be opened = ex.of EP. • Foods portion cost of a prepared item purchased in its EP form need to use the Cost/Unit Method.

  6. Cost/Unit method Formula: PURCHASE UNIT COST # OF PORTION = STANDARD PORTION COST Example: The chef purchases a prepared cheesecake for $8.00. Using the12-slice portion, the Standard Portion Cost is calculated as follows: Purchase Unit Cost Number of Portions Standard Portion Cost $18.00 / 12 = $____ Practice Part 1

  7. The Yield Test • Yield test: process of raw product purchased in “AP” form -broken down into EP & waste. • Purpose = is to determine the yield, the cost/lb, and the cost/per portion of a product purchased in an “AP” form. You break down the product into useable product & non-usable waste • Ex. Food/beverage items: A case of green beans), poultry (a turkey), seafood or meat (10 lb. beef tenderloin), canned (#10 can chopped tomatoes), bottled (14 oz. artichoke hearts), & frozen items (5 gal. ice cream) prepared prior to purchasing. Many products are not 100% usable & include some waste.

  8. Yield Test Step 1: Step 2: Calculate the Edible Yield %

  9. Step 3: Number of Portions Step 4: Edible Cost per lb. AS PURCHASED COST / EDIBLE WEIGHT = EDIBLE COST/LB. Green Beans: $38.00 / 22 lb. = $1.73/lb. Step 4: Edible Cost per Portion

  10. Recipe costing • By knowing the entire cost of the recipe, the business can determine the standard portion cost and adequate selling price, in order to insure that all costs in preparing the recipe are covered and profit is realized.

  11. Recipe costing steps • Step 1: Fill in the required information: name of the recipe, standard yield, standard portion of ingredients including garnishes from the standard recipes. Post the AP price in the cost/unit column. • Step 2: Calculate the Individual Ingredient Cost. Ingredient qty. x price = individual ingredient cost. • Step 3: Determine Yield %: Look up in chpt.11 or book of yields if there is trim plug in edible yield % in form.

  12. Recipe Costing Worksheet Recipe: Chicken Tetrazzini Yield: 48 servings Serving Size: 1/24 (12" x 20" x 2" pan)

  13. Calculating the Cost of One Serving See practice p 3

  14. Calculating Plate Cost Entrée: Fresh White Fish Dinner Costing Date: 8/03/20xx Total Entrée and Accompaniments Cost $6.89

  15. Evaluate current profitability • When you know which menu items are the highest grossing items (meaning they result in the most profit before any other expenses are considered) then you know which items to promote. • What is the highest grossing fish on the menu? • To many operators, gross profit that matters most. • To maximize your profit, consider raising the price of the other fish entrées slightly, or simply train your serving team to upsell the highest grossing item.

  16. Menu Pricing Factors • Value Perception • Perception is reality • Pricing Psychology • Price endings of .99 more suited to qsr menus. • 0 and 5 endings more suited for full service menus • The use of $ or -

  17. Value PerceptionCheap or Expensive? vS.

  18. Pricing Psychology Quick Service Full Service

  19. Pricing Strategies • Food Cost Method • Base Selling Price • Contribution Margin Method

  20. Food Cost Method • Ideal food cost percentage varies, typically 25 -30 %. • Ex: Lemon Rosemary Chicken entrée should be priced at $14.16. Must know the cost of all ingredients in recipe from the half cup of lemon juice to the pinch of fresh rosemary. • Account for side items that come with the entrée. • $14.16 = not typical menu item price, consider lower to $13.99; if you cannot think of an inexpensive way, increase perceived value of the plate enough to raise the price from $14.16 to $14.50.

  21. Calculating Base Selling Price • Step 1: Determine the selling price multiplier by dividing the budgeted food cost percentage into 100% ($1.00). • Step 2: Determine the menu item’s base selling price by multiplying the estimated food cost by the selling price multiplier.

  22. Contribution Margin (Gross Profit) Method • Works for a la carte menu items as well as grouped items: soup, entrée, salad, etc. • Uses operation-wide data to determine a $ amount that must be added to each major menu item’s food cost. • Can use the same contribution margin for all items or use categories. 2 versions of the formula: Combination: #1 #2 Practice Part 4

  23. Markups affect selling prices Different menu items are typically marked up by different amounts. In general, the lower the menu item cost, the higher the markup (and the lower the food cost percentage).

  24. Menu Engineering (Contribution Analysis) • Method of menu evaluation or analysis • Considers menu product mix • Considers contribution margin (selling price minus menu item food cost) • Considers popularity (number of items sold)

  25. Menu Engineering

  26. Low or High Profitability

  27. Categorize Performance High H/L H/H Popularity L/L L/H Low High Contribution Margin

  28. Pre-fix menuTypes 1. All fixed price, all the time 2. Prix fixe and a la carte 3. Prix fixe lunches 4. Prix fixe specials 5. Restaurant weeks

  29. Pre-Fix all the time • High reputation chefs/destination restaurants. • Much clearer forecast of the price per head. • Diner already knows he or she will lay down a significant amount of money before the night's end. • Examples: Chicago's Alinea, Yountville, California's The French Laundry, and New York's Eleven Madison Park all serve exclusively fixed-price menus. • Clientele are essentially seeking out the skill of a chef and the experience of a restaurant, rather than individual dishes • Chef retains control of food and likely to outlay on ingredients and labor. • When you're paying $295 per head at Thomas Keller's Per Se, you're putting aside that sum for a culinary experience. • Whereas when you're paying $28 for a single plate of hearts of palm in Per Se's a la carte "salon room," you lose the context of that fine dining arc—and potentially start questioning whether that individual dish is worth what you're paying.

  30. Prix fixe and a la carte • New York's Gramercy Tavern and Cambridge, Mass.'s Craigie on Main come to mind; of course, any number of other fine restaurants, like Chicago's Blackbird, offer a fixed-price tasting menu in addition to the a la carte options. • This approach may ease the fears of diners who don't want to shell out for a set-price menu • Some may feel more comfortable with a $15 appetizer, $29 entree, and $11 dessert than a $50 prix fixe menu—an expensive-looking number, even if it's the better deal. • Ensure that you put sufficient thought into each side of the menu; even if you're counting on more people opting for one choice than another, there's no easier way to alienate potential repeat customers than to make them feel as if they made the "wrong" choice. • If there's any sort of tasting menu offered, ensure that you're able to deliver a suitably impressive performance.

  31. Prix fixe lunches • Ramp up lunch business that may otherwise be hard to pull customers into the door. • Jean Georges, Del Posto and many other highly esteemed New York restaurants offer lunch menus at less than a third the cost of their dinner service (the former, two courses for $32; the latter, three for $29; both include bread, amuses and after-dessert treats). • Less extravagant end, the fine Greek restaurant Kefi does a $9.95 soup & half-sandwich combo, • An absolute steal for a sit-down restaurant; and Gramercy Tavern does the same deal for $14, an even steeper discount given the caliber of their cooking. • If you're keeping the space open, with all the operating and labor costs that it entails, it's a possible way to make your lunch business stand out.

  32. Prix fixe specials • Valentine's Day, New Years' Eve, Thanksgiving—many restaurants to switch to a fixed-price menu • Both so that the kitchen can better manage and plan for the number of customers • Guaranteed to extract a certain amount of revenue from the tables you're turning (rather than having a spot taken up by a low spender or light eater, when you could make more off that seat). • Special menus often gain a good deal of attention—whether it's an ingredient- or animal-focused special. • Example: "Come get 4 courses of Mangalista pig, Sundays only!", a seasonal tasting ("Our summer vegetable menu will run from July 13-17"), or a thematic offering "In honor of Cinco de Mayo, we're running a 3-course Mexican-themed menu all week".

  33. Restaurant weeks • Cities and towns all have started periodic "restaurant weeks" & restaurants offer special prix fixe menus. • For the diner, it's a way to experience restaurants that might otherwise seem out of their price range. • For restaurants, it's a way to gain exposure and encourage advance reservations. • It may seem tempting to coast during these promotions, serving simpler, lower-cost plates to lock in as much of a profit as possible • Not just used to fill seats—it's to show off your restaurant to potential repeat customers. • Cutting corners may get a few more dollars, but the real benefit is finding new patrons who'll come back.

  34. Changing Menu Prices • If food prices are rising rapidly customers may recognize the need of the operation to raise prices. • In periods of stable prices where other factors may dictate increases customers may not be as willing to accept price increases. • Sometimes menu items are removed and then brought back in anew manner with a higher price. • It’s not wise to raise all prices at once. • Market Price. • Daily inserts for items that have costs that fluctuate.

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