My "Recipe Guide" and How it Affects the Bottom Line.

“If you want to manage somebody, manage yourself. Do that well and you'll be ready to stop managing. And start leading.”

Handling our restaurants food costs is a major task. One sure-fire way to do that is by what I have learned as a "Recipe Guide" what this essentially does, in basic terms, is show all the food coming in at cost and mapping where it goes on my menu and from there I can set my price points. I got most of my ideas about this from research and experience so I am sure I am repeating what most people in the industry already know however just in case others may need clarification I am spelling it out the best I can.

Success in the restaurant business is often measured in very small percentages. Throw in a wrong order here, a trash can of wasted product there, mix in a bit of un-managed labor and you’ve got a recipe for slim at best profit margins .....isn't that why we are in the restaurant business. ....besides our passion for food..profit?

Standards are in place from the beginning to set the standards for consistency and these standards include food cost controls.

For good recipes to become great menu items, I had to learn to make them pleasing to both our guests and our accountant. I break them down into stages that assist purchasing and inventory controls, organize prep and mise en place, reduce production time, and maximize yield. Then I must build the recipes up to serve (hopefully) hundreds of covers.

I break it all down into three stages

Step 1 – Add all Ingredients (no matter how small) to a master inventory list.

Every restaurant should maintain a Master Inventory List that includes all of the ingredients that a restaurant must use in the preparation of their menu items and mine is no different. This list can be maintained using a spreadsheet format (Excel/Peoplesoft will do) that includes purchasing information such as the pack, size and "as purchased" price of the ingredients — information that is useful when creating other management forms such as inventory and order forms.
I then have to accurately calculate the real cost to produce a menu item, the master inventory list should not only reflect the purchasing cost and unit of measure, but also the corresponding recipe cost and unit of measure. Any and all ingredients used in American cooking can be expressed in one of three units of measure when using it in a recipe — weight measure (typically oz or lbs.), volume measure (such as tsp.,tbsp.,cups, qt. or gal.), or by each. Many products are purchased by weight units of measure but are measured for recipes in terms of volume (fluid) measure. To determine a true recipe unit cost, it can require measuring a pound of product to determine its recipe yield.

Step 2 – Prep Stages/Mise En Place

Here I identify parts of the menu item that can be prepared prior to final cooking and presentation, to reduce the time from order to service. Even a simple, single menu item often requires sub recipes that are produced in batch and become part of our daily preparation. Each sub recipe is then added to the Recipe Manual for reference by the kitchen staff. The cost of each sub recipe ingredient is calculated by multiplying the number of recipe units used by the recipe unit cost listed in the Master Inventory. The sub recipe batch is then assigned its own recipe unit and cost based on to total cost to produce the batch and how much it yields.

Step 3 Calculate Menu Item Cost.

Finally, the cost of the menu item is determined by calculating the cost of each individual recipe or ingredient needed to produce the menu item, then affixing a selling price that produces the desired profit. I will review my menu item cost every month to ensure that cost expectations are accurate. With our POS system we are able to Red Flag market wide price increases per bulk item. This helps me determine which food vendor that product will be purchased from as well as if I should make a recipe change.

Variables

Generally, my food cost should be around 20-28%. This means that if I pay $1.00 for something, I need to charge minimum of $3.34. It may seem like I am charging a lot more than necessary, but keep in mind that we aren't just paying for the food itself. We are paying someone to prepare the food, serve the food, and clean up after the food. Everything in our restaurant, from labor costs to the "Set Costs" IE: Electric and Gas bill needs to be covered by the food we serve. As our first restaurant is a QSR we have a great advantage in that we have a smaller food cost and depend on volume more than covers or "Butts in Seats" like a FSR does. While a Get them in Get them out mentality exists in a lot of QSR's that will not be the case at our restaurant where we will do everything we can to provide a great experience so the customers want to return.

I am quite sure I have left more out than I put in however this is a great place to start.

As always I welcome your feedback.