Maybe you can't raise your prices, but you can lower your average food costs. Here's how.
THE COST OF many ingredients is soaring. But passing on those increases gets pretty tough when customers are in belt-tightening mode. Balancing these two opposing forces requires a little ingenuity and outside-the-box thinking. If you're looking for solutions, you're in the right place. Here are 10 strategies to help you stay profitable.
1. Kitchen Economics 101: Buy what's in season
“It's important to have a sound understanding of seasonality,” advises Dean Small, founder of Synergy Restaurant Consultants, which provides culinary, financial and operations support. “Using stuff out of season makes absolutely no sense. Servings items in season shows that you're more relevant, and you'll also have the freshest, best-flavored and lowest-cost foods.” He suggests working closely with purveyors and following a chart that indicates the time of year that various foods are at their peak. And don't forget that produce isn't the only thing with seasons; certain seafood follows a calendar as well. Having species-specific recipes ready and anticipating the latest catch is a way to net great prices and top quality.
2. Follow the rule of thirds
When she creates new menus, New York-based consultant Arlene Spiegel tends to divide the recipes into thirds. “A third of the items should be unique signature dishes. The second third comes from all the ingredients and the byproducts that result from those signature dishes. The last third is popular or traditional items, things that you need to have for the traditional eater,” she explains.
Ideally, she explains, the last third of recipes should incorporate ingredients from inventory or byproducts from the dishes in the first two categories. That practice ends up reducing waste, which lowers overall food costs. So, for example, if you have steak on the menu, the meat trimmed away can be used for a steak kabob, a burger or a slider. “You need to think about the nickels and dimes and dollars that go into the garbage because the chef has no use for the byproducts or inventory items that get used once and thrown away,” Spiegel says.
Often owners need to step in to curtail waste, Spiegel adds. “In chef-driven one off-type restaurants, there's a lot of ego involved. Chefs just want to put on the menu things they like to cook, and very often they are not good businesspeople,” she observes. “Chain restaurants, on the other hand, wear that utilization/no waste hat from the very beginning. They have culinary R&D departments always on the lookout for opportunities.”
At Chicago's Big Jones, executive chef/owner Paul Fehribach understands how to make the most of leftovers. “Last year we introduced a sweet potato soup to the menu because we needed something to do with all the trimmings we'd get after cutting the sweets into cubes for hash,” he says. “So the sweet potato part was basically free. We added some coconut milk, aromatics and a dressy garnish, and we sold tons of it at $8 a pop. Food cost? About 85 cents.”
3. Consider lesser-known and value-added products
Hot sellers and trendy items are going to command top prices. Looking beyond those products can help boost your margins.
Hurricane Grill & Wings, a casual chain based in Florida, takes advantage of Swai, a Vietnamese catfish, in its fish sandwiches. Swai sells for less than $1 a pound; the sandwich menus for $8. Hurricane also uses preskewered shrimp in marinated and grilled dishes, such as its Island Grilled Shrimp. Food cost for the latter hovers at around 22 percent, and the skewers require less labor to prepare.
Restaurant guru Aaron Allen, c.e.o. of Quantified Marketing Group, says he managed a restaurant once that stockpiled discounted cases of a new liquor — “we assumed it was a terrible product if we had never heard of it” — and ended up creating drinks and building a buzz around it. Before that time, he recalls, total bar costs ran about 28 percent; eventually the little-known liquor became a top seller and helped push bar costs down to 16 percent.
4. Simpler can be more efficient
For a smaller restaurant, a menu with fewer dishes can accomplish two things: maximize buying power and keep a lid on labor. An arguably extreme example is New York City's Trattoria Cinque, which has five appetizers, entrees, pastas, wines and desserts. There is some cross utilization — fish leftover from entrees goes into a fish soup — but simplicity is the main weapon owner Russell Bellanca uses to keep costs down. The menu lists one steak, for instance, which gives the restaurant a little more bulk purchasing power. And with a wine list that includes five whites, reds and reserves, “we buy more of each, so we stand out a little compared to a restaurant that uses a bigger variety of wines. It helps in negotiating price and controlling inventory,” he adds. Limiting the dishes and ingredients keeps prep simple, too, thus containing labor costs.
5. Remember that low cost does not equal low taste
Many chefs understand the value of less-expensive cuts of meat or offal, but these cheaper products are not always suitable for a menu. They may demand a bit more creativity from the kitchen staff, but items like sausage, sweetbreads and tripe pack a strong flavor punch at a value price.
6. Build on an inexpensive foundation
Synergy's Small says appetizers are an ideal category for experimenting with lower-cost ingredients. He suggests taking something inexpensive like a pizza or flatbread crust, for example, and looking for ways to dress it up that add value. Because the portion is smaller, there's only so much you can add to that base. “You might get $7-$8 depending on what you put on it, and the food cost might be 20 percent. To me, that's a win,” he says.
A good example of this approach: Squeal, a hot concept in New Orleans, serves smoked pork cakes, a riff on New Orleans-style crab cakes that contain seasoned pulled pork, lightly breaded and topped with chili sour cream and homemade salsa. An appetizer of three goes for $8.95.
7. Shake it up
Keep your menu selection intact and it will be tough to disguise a price increase, at least with your regular customers. But if you swap out one dish for something completely different, you have some license to bump up the price, since there is no basis for comparison.
Added bonuses: New signature items can separate you from the competition, give the staff something to get excited about and provide an opportunity for better margins.
“Restaurants that are finding success are doing so with innovation, not just through price hikes or discounts,” Allen says. He advises more frequent review of menus. “Operators are often updating their menus only once a year,” he notes. “That's one of the things leading to a number of bankruptcies. It's important to do at least a quarterly menu analysis.”
8. Presentation is a big factor in perceived value
“Knife skills are essential,” says Don Hensley, a corporate chef with Martin Brothers Distributing in Cedar Falls, IA. A chef with well-honed knife skills can take a 6-ounce portion of beef and make it look bigger, for example. Kitchen tricks like wrapping proteins in puff pastry and filo can make them look more substantial and result in a more dramatic presentation, too.
9. Think ethnic
“Two of the biggest trends right now are Latin and Asian,” Hensley says. Both are based less on center-of-the-plate items and more on one-pot dishes and stir fries made from underpriced cuts of meat and other inexpensive products. Adding perceived value means getting creative with presentation.
To make a so-so stir fry pop, for instance, he suggests garnishing creatively, perhaps spotlighting one ingredient (fried noodles used as an accent, wontons as a garnish, etc.). Tricks like these go beyond elevating the presentation. They also tie all the components together and add another texture or flavor to a dish.
A good example of this principle is the avocado-topped Jicama Mango Salad with Cilantro and Spicy Peanuts, a favorite at Taco Bar in San Francisco. The $5 dish creates a fresh and authentic Mexican impression with a food cost of only $2.25.
10. Look at the big picture
One costly ingredient in a recipe may well be worth it. Saffron, for example, is expensive, but a little goes a long way, and because it's so dear it's more likely to create an impression. “People shouldn't get hung up on the cost of one raw material,” Small says. “You need to look at the overall yield of the entire recipe.”
Pasta is a perfect canvas for luxury ingredients. MacDaddy's Macaroni & Cheese Bar in Monroe, CT, builds all of its dishes on elbow macaroni. The Mac Mushroom, a skillet full of macaroni and cheese with shiitake and cremini mushrooms, porcini emulsion, manchego and truffle oil, runs a 19 percent food cost. “Guests see the exotic mushrooms and truffle oil, and they want that luxury and indulgence,” says chairman Robert Dunn.
Flavor is the key, Small says. “Everybody tends to gravitate toward the high-end raw materials. But smart chefs understand how to deliver flavor with high-quality ingredients that don't need to be expensive.”