6 Ways for Restaurants to Control COGS

controlling restaurant COGS

Posted: Feb. 22, 2019

In the food and beverage industry, the term COGS refers to the Cost of Goods Sold. As the owner or manager of a restaurant, you're probably very familiar with COGS. Balancing how much your restaurant is spending on supplies and ingredients—everything from seasonings to meats—versus how much it’s being sold for on the menu is likely one of your more time-consuming tasks.

We are here to help! Use the six tips below to control your COGS by cutting restaurant expenses and waste. 

1. Categorize your food expenses. The general rule is that your COGS should account for 31% of the menu price. It’s easier to control COGS by keeping track of ingredients per group in order of price. For example, because meat and seafood are generally the most expensive menu ingredients, they belong in the highest percentage group. Try splitting your ingredients up like the following:

Meats and seafood – 10%

Produce – 8%

Dairy – 6%

Baked goods – 4%

Beverages – 3%

If you organize ingredients this way, you can keep COGS at the recommended 31%.

Depending on the type of food you serve, the food groups and percentages might make sense in a different breakdown. Organize the food items in your inventory and create guidelines for how much should be spent per category to get control of costs.

2. Comparison-shop all your ingredients. It’s wise to build long-lasting relationships with food suppliers, yet it’s good practice to comparison shop. The more information you have on ingredient prices, the better you can source products. If you have a solid relationship with a particular supplier whose product is sold for more than others, talk with your contact about why. He or she might be more than happy to negotiate a new deal for your restaurant.

Lavu Pro Tip: Never allow the product to suffer in quality to pay a significantly lower price; your customer base will recognize the difference.

3. Measure every ingredient in the food-preparation stage. Food waste is a huge contributor to profit loss. One of the simplest ways of reversing that is by measuring all ingredients during preparation. If your BOH isn’t properly measuring ingredients, a heavy hand could be impacting your bottom line. Additionally, double-check recipe amounts. You might find that there is no difference in flavor when using less of a certain ingredient.

4. Rotate your stock to reduce waste. Another way to limit food waste and reduce profit loss is by rotating your inventory. Pull out previously purchased items so that they don’t get overlooked. All too often, more of the same is purchased and the original stock spoils, and later must be thrown out. Label each shipment of goods with their received dates and pull unused items to the front, then, store new shipments in the back or in storage refrigerators. It will take a little more time in your inventory process but will save you a lot of money.

5. Adjust the menu and prices when using seasonal ingredients. Depending on the season, the price of certain produce fluctuates. Rather than overpay in off seasons or overcharge customers, serve seasonal items in season. Switch out expensive off-season fruits and vegetables from the year-round dishes and turn them into seasonal menu specials. When you wait for fruits and vegetables to be plentiful (and cheaper), not only do you maintain credibility with customers, you have a bigger margin to earn profits from.

6. Design specials that reduce waste and use slow-moving stock. Another way to use specials to your advantage is by integrating soon-to-expire ingredients—there is no reason ingredients should be thrown out if they are still safe and edible. Leftover chicken can be turned into a chicken salad sandwich special. Even the most basic ingredients have options. For instance, stale baguette bread can be used the next day for a pizza-bread special. Task your kitchen to start thinking outside of the box to find new ways to optimize all the ingredients in your pantry.

Even ugly food is tasty; see how much money can be saved by using imperfect produce.

 

Posted: Feb. 22, 2019 | Written By: Emma Alois

Management

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It’s a fact: The quality of your restaurant’s POS system can mean the difference between profit and loss. Having the right POS solutions positively affects the functionality of every aspect of your business. From maintaining optimum customer care standards, to your ability to manage your inventory, effective POS can help your restaurant succeed beyond your wildest expectations.

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