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The #1 Financial Mistake Killing Your Restaurant's Profits (And How to Fix It)

Master your finances: The Key to Thriving in the food industry

Author

Molly Bravo
July 08, 2024

3 SURPRISING facts every entrepreneur must know

  • Often times you will be in constant jeopardy of losing it all

  • The success or failure of your company will weigh heavily on your shoulders

  • There are times when you will forget the last time you actually paid yourself

As a chef or restaurant owner, you're passionate about creating incredible culinary experiences for your guests. But let's face it – passion alone doesn't pay the bills. Today, we're tackling the single most critical factor that can make or break your food businesses profitability.

The #1 Financial Mistake Killing your Restaurant’s Profit

Uncontrolled food costs are the silent killer of restaurant profits. Many chefs focus on creating great dishes but overlook the crucial balance between quality and cost. This oversight can quickly erode your bottom line, turning a potentially successful restaurant into a financial nightmare.

Your Actionable Step: Implement a Weekly Food Cost Analysis

Here's what you need to do:

  1. Calculate your ideal food cost percentage (I prefer to keep our food cost at 18% or lower- however, we cook in volume. They “Say” your food cost will typically be 28-35% of menu price).

  2. Track the actual cost of ingredients for each menu item.

  3. Compare actual vs. ideal food costs weekly.

  4. Adjust portion sizes, ingredients, or menu prices to align with your target food cost percentage.

Why This Works:

  • Identifies high-cost menu items that may be hurting your profits

  • Helps spot inefficiencies in purchasing and inventory management

  • Allows for timely menu adjustments to maintain profitability

  • Creates a data-driven approach to menu planning and pricing

Remember, even a 1-2% reduction in food costs can significantly boost your bottom line. This simple yet powerful practice can be the difference between struggling to stay afloat and running a thriving, profitable restaurant.

FOOD COST
3 Quick Tips For SHOPPING to Cut your Food Cost

  1. Without volume, don’t purchase whole sale. You’ll sit on your product and won’t be able to push it fast enough- especially if you don’t have anywhere to store it.

  2. Shop local, farmers markets are best- and going directly to the source (it removes the middle man and you can purchase exactly what you need)

  3. If you’re too big to shop at Farmers Markets, but too small to get wholesale pricing, work to get your food delivered from farmers, directly to your kitchen (it saves you time and you have a better control on what you use)


3 TIPS TO LOWER YOUR FOOD COST
If You Struggle With Volume

  1. Implement portion control and standardize recipes: Precise portioning can significantly reduce waste and overuse of ingredients. Use standardized recipes and train staff to follow them consistently.Consider pre-portioning expensive items before service to ensure accuracy and control costs of premium ingredients.

  2. Embrace seasonal and plant-based ingredients: Seasonal produce is often more affordable and fresher. Incorporate more plant-based options into your menu, as vegetables are generally less expensive than proteins. This approach can lower costs while also catering to growing consumer demand for healthier, sustainable options.

  3. Reduce food waste through creative menu planning: Utilize a "root-to-stem" cooking approach to maximize ingredient usage. Create specials or promotions to use ingredients nearing expiration.Consider adjusting portion sizes slightly for dishes with expensive ingredients - a 10% reduction in portion size can save 10% on that dish's cost without significantly impacting customer satisfaction.

We're building an online community of likeminded chefs to help you turn your ideas and dreams into PROFITABLE and THRIVING businesses.

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Join our free Facebook Community to connect with fellow chefs and restaurant owners. Share your challenges, get advice, and learn from others who have successfully implemented food cost management strategies.

Take Action Now


Start your food cost analysis this week. It's the first step towards financial stability and success in your restaurant.

Stay inspired and profitable,

Molly Bravo
Founder and Entrepreneurial Spirit behind, Wylder Space Inc.

P.S. For a deeper dive into food cost management, check out our latest blog post: "Boost your food business: Effective Marketing Strategies on a Budget ."

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