Restaurant margins are notoriously slim, so figuring out how to control costs, more often than not, boils down to a do or die scenario. Food cost plays a major role in any restaurant’s success or failure—that French foie gras may be awesome, but not if it kills profit. As 2009 Seattle Rising Star Restaurateur Ethan Stowell says, “As a chef you have to wear the hat of a business man sometimes,” especially when it comes to food cost.
But first, what is food cost? It’s the percentage of total restaurant sales spent on food product. The formula for calculating food cost is simple: net food purchases divided by net food sales (net means after the change in inventory). The rule of thumb within the fine dining industry is to maintain a 30% food cost, or less.
When 2009 Boston Rising Star Chris Chung opens his restaurant AKA Bistro in Boston’s Lincoln Park, he anticipates his food cost to be at 33% the first month, but to reduce it to 30% afterward. Similarly, 2008 Las Vegas Rising Star Zach Allen, who heads up the kitchens of all three of Mario Batali and Joe Bastianich’s Las Vegas outposts, was able to lower his food cost at all three venues in the last year: Enoteca San Marco runs at 24%; B+B Ristorante at 28.5% (lower than its targeted 30%); Carnevino 30.5% (also lower than its target of 32%—a rarity for a steakhouse).
How do they do it? Controlling food costs is multifaceted to be sure, but simple at heart. Chung summarizes his method to control food cost into a four basic principles: order as necessary, maximize each ingredient, cook seasonally, and have more than one vendor. For Stowell, who operates four successful restaurants in Seattle (Union, Tavolàta, How to Cook a Wolf, and Anchovies & Olives), the starting point and key is keeping a finger on the pulse of food cost at all times.
Robbie Lewis is the corporate chef for the software company Oracle in Northern California’s Silicon Valley. He oversees eight cafes on the corporate campus and has an annual food budget; they run a weekly inventory in each café and order daily. Zach Allen’s inventory assessment depends on the product: “we do a nightly inventory on our cut steaks and usage at our steakhouse [Carnevino]... we do a weekly inventory on our beef warehouse... [and] a monthly inventory on all items.” No matter the system, it pays to know what you have and the rate at which you burn through your inventory.
Stowell also takes advantage of his buying power: “Having four restaurants, I buy more direct from the source than I used to, whether straight from the farm or fish auction, so there’s no middle man. Whereas, if you have one restaurant, it’s harder to buy anything from a fish auction. They’re like, ‘you’re not buying enough with only 20 pounds at a time,’ but with four restaurants you can buy 150 pounds at a time.”
Allen concurs: “We find many outlets for every part of the protein or vegetable that we use from—braised beet greens for raviolis to ciccoli from the pork that is left from making salumi.” To decrease waste from spoilage, he orders proteins and other short shelf life items daily and advises chefs to “not be afraid to 86 items” from the menu during service.
Stowell finds success in weighing his menu with both low and high cost items, and adjusting the menu to meet their food cost targets. “Make your menu work for you,” he counsels. “Some months we have to sell more pasta. In every restaurant I have, I have homemade gnocchi because it’s a low cost item people really enjoy. If food costs are really low, I can have a steak dish and not charge as much—those things balance out. I can run turbot as a fish: a portion costs you $10 to put it on the plate; I don’t feel comfortable charging $35 for it, so I run other lower cost food items to balance it out so I can charge $18 that item. I take a hit on it, but I do it because I enjoy it. But I have to be smart about my menu and balance.”
Slow months are when you have to be the most mindful of upward creeping food costs, but Stowell says they should still remain the same as even your busiest month with careful attention. “If you’re expecting January and February to be softer months, you don’t want as many high food cost items.”
In the end, Stowell reminds chefs that “food cost has to be a living and breathing thing.” Knowing where it’s at—if it’s running high or low—and working with your menu, your staff, and vendors to reduce waste, order wisely, and control portions are all essential elements that play a crucial role in food cost. “You have to pay attention,” Stowell says, “it’s better to find out your food costs on the 17th than the 22nd [of the month]. Then you can react to that and say, ‘okay, fine. It’s been slow this month, so I can’t run the turbot, but I can still put on the gnocchi dish because that’s a low cost item.“