How to Reduce Food Cost in Restaurant Management

Reducing food cost in restaurant management is as important as ever. In a time when dining restrictions remain uncertain, opportunities to make money are limited. Plus, the prices of ingredients are fluctuating frequently due to supply chain and logistical challenges.

Maximizing every dollar earned right now is an absolute must for restaurants to weather the storm. In this blog, discover effective restaurant management techniques to reduce food cost and position your restaurant for short- and long-term financial success.

Reduce food cost by managing recipes and reengineering menus

Calculating plate cost is complicated and time-consuming, requiring many manual calculations and frequent adjustments. Although many restaurants calculate plate cost when an item is added to a menu, it only captures the cost of that plate at a specific point in time, ignoring dynamic changes in ingredient pricing.

Knowing the true, current cost of every plate coming out of your kitchen is essential to reducing food cost in restaurant management. That’s why xtraCHEF offers a Recipe Management feature to minimize the effort of ongoing plate costing and maximize your margin on every dish.

Just upload your invoices to automatically build out a Product Catalog! From there, you can easily build prep and menu recipes in a drag-and-drop format. We’ll automatically and continuously update the prime costs of those recipes thanks to the data powered by our best-in-class AP automation.

Watch the Variance Analysis report to see exactly how the cost of each recipe changes over time, down to individual ingredient price changes. This enables restaurant operators to make changes to their menus before food costs soar, rather than scrambling to make a change after the damage has been done.

xtraCHEF makes it easy to substitute the menu items that are driving up food costs. Simply use the drag-and-drop interface to find more profitable combinations of the prep recipes you’ve already calculated! We give you the ability to reengineer recipes on the fly for a menu that maximizes margin.

Streamline inventory management to reduce food cost

Restaurant inventory management is another key component of reducing food cost in restaurants. Knowing what you have on hand and what the value of that inventory is can help prevent order- or under- ordering, reduce food waste, and give you a clearer understanding of your cost of goods sold (COGS).

Lean times call for using a lean inventory. Use what you have on hand by creating menu specials or meal kits—especially for perishable goods. To get a better handle on what’s in the kitchen and what might go bad, take inventory as frequently as possible so you aren’t throwing food (or money) in the trash.

Of course, taking inventory is another time-consuming task when it comes to restaurant management. But xtraCHEF is to the rescue once again with our Inventory Management feature! The monetary value of your inventory is always accurate, and our flexible configuration lets you and your staff take inventory exactly the way you like to.

If you don’t currently take inventory, xtraCHEF is the easiest way to get started. Inventory Management is “so straightforward, it’s almost like a game,” says Cassidy Womack, the Director of Operations for our customer Sidewall Pizza Company. “What do you see? Enter it. That’s it. There’s no guesswork involved.”

Track vendor price fluctuations to catch rising food cost

There’s a lot that can’t be controlled when you run a restaurant. But you can control who you purchase from in order to get the best bang for your buck! xtraCHEF’s Vendor Hub offers a complete list of all of your vendors, plus access to all of the items you’ve purchased and the prices that you’ve paid.

Search and sort invoices on the Vendor Hub by date, location, and GL code. More importantly, for food cost management, you can discover which vendors you purchase from most frequently as well as how their prices are trending up or down over time.

By using the historical data that we gather from your invoices, you can easily see which products and vendors have the most volatile pricing and how their prices compare to other sources. This feature is extremely helpful in a time where food prices across the country are unpredictable, so you can keep your own food costs low by finding better pricing elsewhere.

For additional help in reducing food cost, xtraCHEF hosts your vendor bid sheets. Easily compare ingredient prices across potential vendors to find the items you need with the quality you desire at the right price—there’s no need to manually enter bid sheet information and hobble together a comparison on Excel!

Manage food cost in your restaurant now

xtraCHEF customers are already prepared to get aggressive about food costs. Are you ready to join them? Reduce food costs in restaurant management quickly and easily with our cloud-based software. Just request a demo to get started today!