Understanding Food Service Cost Controls in Food Service Management
Food service operations, no matter what their size, often have low profit margins due to the very nature of the industry. Factors such as easily spoiled food purchases and clients with unreasonable expectations of service place an even bigger strain on the industry and make it difficult to have a profitable turnover.
Thus, one of the most important aspects of a successful food-related enterprise is finding ways to control food service costs. This aspect of the industry falls under the supervision of food service management. Let's try to get a deeper understanding of the practices related to food service cost controls.
Start with Controllable and Non-Controllable Cost
Controllable cost refers to the type of cost that can change in the short term. This includes direct variable cost, promotional budget, employee salaries, and repair and maintenance.
Non-controllable costs, on the other hand, are those that remain fixed over a period of time and remain unchanged over short term periods. These include rent, mortgage, real estate taxes, and licensing fee. In terms of cost control, your focus will mainly be on controllable costs that can be changed and brought down through shrewd budget handling and efficient management practices.
Remember Cost to Sales Ratio
This is calculated in dollars by dividing the cost of management with sales over a period of time. It gives you a good estimate of your profit margins and how much of a decrease in cost of management will be needed in order to have a higher profit turnover.
Forecasting and Budgeting like a Pro
While preparing the budget for your restaurant, you need to have as accurate an idea as possible of all the costs you will incur setting up the eatery, investing in real estate, and whatever additional equipment you will require. Determine whether or not you will be able to handle the financial strain of taking on the operation.
Consult with a professional and get an idea of the amount of capital you will be able to invest in the initiative. Also remember to budget for a certain amount of extra cash you would need in case of a work-related financial emergency.
Calculating Food Costs: Complex but Essential
This includes not only the cost of raw food materials, but also the cost of preparing the specialized meals that will be served at your eatery. Cost of hiring multiple cooks, transporting the cooked and uncooked materials, and all other ancillary costs need to be kept in mind while calculating the food cost.
The Low Down on Menu Pricing
This is a tricky part of the business to get right, mainly because there is no right answer to the question of food pricing at a restaurant. Prices for raw food materials fluctuate all the time, and the restaurant rate is also significantly affected by the ambience and setting of the eatery.
Make sure your rates are competitive in comparison to similar eateries in the local region. Assemble as much data as possible relating to other restaurants in the area in order to make an informed decision.
The Need to Calculate for Purchasing Costs
Food is an easily perishable resource. It is not practical to buy all the food your food service will need in bulk amount. Several items will have to delivered daily, and a strong relationship needs to be built with local food vendors to ensure regular delivery at competitive prices.
Don’t Forget about Storage and Delivery
The rates offered on storing and delivering food products usually vary depending on the length of the operation, the amount of product to be transported, and the distance traveled in order to complete the delivery.
Make a careful study of the local vendors and the prices they offer for their services. The cheapest offers are not always the best choice, especially when it comes to the matter of transporting perishable food items at short notice without damaging them. Investing in your own delivery van is also a sound move if you feel it is necessary for the smooth continuation of your business practice.
Factoring in Labor Costs
Not just a matter of hiring waiters, labor costs include the entire eatery staff, external support, website management crew for digital marketing, and any other manual labor costs your business might require. Workers who cost more must also be able to bring in more profit for your business, otherwise stick to the regular market price for the jobs that do not require special skills.
Projecting Revenue with Confidence
After all the costs have been brought down as much as possible without compromising on quality, make a projection for the growth rate and profit margins you hope to achieve with your new business guidelines. Keep checking your business's data points to ensure you stick to the path and succeed in making your business more profitable.
If you’re passionate about providing the best possible dining experience for customers and are looking to earn a Bachelor of Science Degree in Food Service Management, include ECPI University in your research. Our accelerated learning program could help you to earn your degree faster and start working sooner. Contact a friendly admissions advisor today to see if ECPI University is the right fit for you.
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