How to Control Food Costs: Key Accounting Strategies for Restaurants

As a restaurant operator, keeping food costs under control is essential for maintaining profitability. However, understanding where to focus your attention and applying the right accounting strategies can make all the difference. Here are four key strategies that can help you stay on top of food costs and boost your restaurant’s bottom line.

Track Inventory Regularly

Keep your inventory in check with regular counts and the right accounting cycle.

Tracking inventory is crucial for managing food costs, but how often you take inventory depends on your accounting cycle. Both monthly and period accounting cycles have benefits and challenges:

• Monthly Accounting Cycle: Inventory is recorded on the last day of the month. However, the timing can be tricky, especially if the last day falls on a busy Friday or Saturday. These challenges could lead to extended hours or overtime. The advantage of monthly counts is that it aligns with monthly bills, ensuring all expenses are captured without relying on accruals or prepaid expenses.

• Period Accounting Cycle: Period accounting helps mitigate the timing issue by allowing you to select a "slower" day for inventory counts, such as Sunday. This allows for a more consistent, efficient process. However, some holidays like Cinco de Mayo or Thanksgiving may fall on different dates each year, which could complicate year-over-year comparisons.

In both cases, having standard operating procedures (SOPs) in place is critical to ensure consistency. Assigning two team members for accountability, weighing partial items (like liquor bottles), and conducting regular spot checks can help maintain accuracy and reduce discrepancies.

Monitor Vendor Pricing & Reconcile Statements

Ensure you're getting the best pricing and avoid discrepancies with your vendors.

Another essential aspect of controlling food costs is monitoring vendor pricing and regularly reconciling statements. Comparing prices from multiple suppliers—like US Foods, Sysco, and local providers—can help you secure the best deals and avoid overpaying. Using third-party services or software like xtraChef, MarginEdge, or Ottomate (formerly PlateIQ) can help streamline this process by assisting with invoice coding, identifying duplicate charges, and ensuring accurate pricing.

Additionally, always review vendor statements to ensure there are no discrepancies, and take advantage of contract pricing whenever possible. This proactive approach can help prevent unexpected increases in food costs and ensure consistent pricing.

Looking for better ways to manage your accounts payable and vendor relationships? Check out our Weekly AP Report to see how you can streamline your processes.

Optimize Menu Engineering

Focus on high-margin items, and use accurate costing to maximize profitability.

Menu engineering is one of the most effective ways to control food costs. Here’s how you can optimize your menu:

• Perfect Costing: Knowing the ideal cost for each menu item, including food, beer, wine, liquor, and retail, is crucial. For instance, your ideal food cost should be between 27%–32%, while liquor can be around 15%–20%, and beer and wine can range from 18%–35%. These numbers will vary based on your business model, but establishing these benchmarks will help you identify areas for improvement.

• Purchasing Trends: Using POS software can help you track purchasing trends and better plan your inventory. Look for patterns in popular menu items to predict demand, adjust purchasing, and avoid overstocking.

• Promote High-Margin Items: Highlight dishes and drinks with the highest profit margins to boost sales without increasing food costs. For example, feature signature cocktails or premium entrees that you can price higher but have a low food cost.

Regularly performing cost analysis on your menu will help you stay on top of fluctuations and make adjustments as needed. Menu items with high waste percentages or low profit margins may need to be revised or eliminated.

Implement Portion, Waste, & Quality Control

Ensure consistency, reduce waste, and maintain high-quality standards to protect your margins.

Portion control is critical to maintaining consistent food costs. To reduce waste and ensure quality:

• Menu Builds & Training: Use menu builds to define portion sizes and guide your staff on consistent servings. This helps both new and experienced employees maintain accuracy and prevents unnecessary over-portioning.

• Waste Logs: Record any food waste on a daily basis and identify trends. Menu items with high waste percentages should be evaluated for possible changes. You could consider offering these items as “while supplies last” specials to reduce waste.

• Quality Control: Accurately track food returns and identify if returns are happening during busy times or with certain crew members. This can help you pinpoint inefficiencies or quality issues that may be contributing to unnecessary waste.

By maintaining these controls, you’ll better manage inventory, reduce food waste, and keep your costs in check while improving overall customer satisfaction.

Summary

Controlling food costs is a multi-faceted process that requires consistent effort and attention to detail. By implementing strategies like regular inventory tracking, monitoring vendor pricing, optimizing menu engineering, and maintaining portion, waste, and quality control, you’ll be well on your way to improving profitability and running a more efficient restaurant.

If you’re ready to take control of your food costs and optimize your accounting processes, get in touch with ACE'd Accounting Solutions for expert support.