How to Increase Your Restaurant Profits with Food Costing Software

Hey there restaurant pros. It’s David Scott Peters and welcome to episode 97 of the restaurant prosperity formula. I’ve been coaching restaurant owners since 2003. And the restaurant prosperity formula is based on what the most successful restaurant owners I’ve worked with do on a daily basis to achieve their success. The basic premise of the formula centers around achieving prosperity, freedom of your restaurant that financial freedom you deserve. To achieve prosperity, you have to follow a very specific formula made up of leadership systems training, accountability and taking action.
Today we’re taking an exhaustive look into a transformative tool, food costing software. This isn’t just a technological upgrade it’s a complete overhaul of how you manage your food costs, streamline operations and enhance profitability.
Let’s get started. But first, a word from our sponsor. We all know managing costs is one of the most important parts of running a profitable restaurant especially now, but between fluctuating vendor prices, waste labor, and the never ending list of tasks that demand your attention on a daily basis. It can be challenging for even the most experienced of us to manage costs well, that’s where margin edge comes in. Margin edge is a complete restaurant management software that automatically uses data from your POS and invoices to show you food and labor costs in real time. Don’t wait until it’s too late. Margin edge gives you tools to make decisions in the moment, like a daily p&l price alerts on key ingredients and real time plate costs. All without ever having to touch a spreadsheet. Take control of your costs work more efficiently and be more profitable, go to www dot Marjan edge.com forward slash DSP to learn more and schedule your demo today.
I’m here to dive deep into a critical component of restaurant management. Food costing software isn’t just an upgrade. It’s a revolutionary shift in how you approach your operation. From managing expenses to optimizing each dish that comes out of your kitchen. prepared to transform the way you handle food costs and boost your restaurants efficiency and profitability.
Why food costing software? Imagine every ingredient in your kitchen tagged with real time cost data. Every recipe analyzed for cost efficiency and every waste item accounted for that’s the power of food costing software.
For restaurants Grossing over $850,000. in annual sales, precision and cost management isn’t optional. It’s essential. These tools not only safeguard your margins, but also provide a framework for systematic growth and sustainability.
Here’s the nitty gritty of food costing software.
One immediate invoice integration. Traditionally, invoices they arrive what they arrive at your back door and it means hours of manual entry a process prone to error and delays. With modern food costing software, you simply take a photo of the invoice, send it up to the cloud and it’s digitized automatic price updates. inventory count sheets are accurate and recipe costs and cards are all current as of the last delivery. This real time data captures reduces human error and ensures that costing models are always based on the latest prices.
See when you can take a picture an invoice and instead of going through the manual process whether it’s a spreadsheet and going through page after page after page make making sure FIFO first in first out right and right when is the most recent time I purchase this item and change it. It takes forever. Then if you’re doing accounting and you’re you’re sitting there saying okay, I’m still doing the old model of I want poultry, and dairy, you know, you go through all the different proteins, and you’re splitting up your invoices, which I don’t agree with today with software. But let’s say you’re still doing that, well with software. It’s automatically mapped. Imagine you took the picture of the invoice and it’s there in fact it goes one step further and actually can make a journal entry in your QuickBooks for you. Saving you time. But when you know that when you look at your recipe card, you looked at your inventory or calcium, you look at your next order. It’s based on your most recent price. It’s amazing the power you have to control your budget.
Now number two is vendor management and inventory optimization.
Effective vendor management transcends simpler ordering you know, simple ordering placement right? With food costing software. Each vendor profile includes not just contact details, but also current prices, delivery schedules and historic data on order accuracy. This comprehensive data set ensures you make informed purchasing decisions on the inventory front. The software categorizes products by storage location and usage frequency enabling predictive ordering that minimizes overstock and reduces spoilage.
Again, when I’ve got this real time data, how quickly you can ensure that your restaurant operates efficiently bringing detailed recipe costing every chef and I mean every chef knows that a recipe is more than a list of ingredients. It’s a blueprint for cost and quality. Food costing software breaks down each recipe into its component costs, updating them as ingredient prices fluctuated. And this brand will visit visibility allows chefs to tweak recipes without sacrificing quality ensuring each dish contributes positively to the bottom line.
Recipe costing cards are the most important thing you’re going to do. Like if you’ve been following me for any length of time you know that I say the two most important things any restaurant should have are budgets and recipe costing cards. And then I sarcastically what are the two things they never have budgets and recipe cards. Why? Because they’re too hard. Don’t have an excuse. If you want to run profitably, you tell me a business that doesn’t know what every item they show costing. But if you go to buy tires, that that manager doesn’t know what each tire cost him or her and what they need. To sell it to make a profit. Any retail situation yet we allow our chef to put up addition to the end of the window and say here’s today’s special and you say well, what are we charged and they go they stare at it and out of their ears or their rear end they are 1695 You’ve got to be kidding me How can you say I don’t know what if I’m why I’m not making money. If you don’t know what every item costs you software makes it easy and makes it current accurate. Every single delivery number for the shelf the sheet inventory system. This revolutionary approach to inventory management organizes your inventory list in a in a what basically mirroring the physical layout of your storage areas. This method is not only about speeding things up, right the actual speeding up the physical count because you’re going to count the product in the order appears on the shop the way you want it counted and it’ll have the price there. But it significantly enhances accuracy. Because products are not missed. Products are counted the way you see them. You’ll know precisely what you have, where it is and how much it costs you enabling better decision making and reducing the time spent on routine tasks.
How can you say I don’t know why I’m not making money if you’re not accurately counting the product on your shelf minimum on a weekly basis for value to know what your actual food cost is based on beginning inventory plus purchases minus ending gives us use use divided by sales gives us food costs. Imagine that software automatically does that for you because it already has your sales in it. It already has your purchases. It already has your two inventories. It is merely a report that within minutes of taking your inventory you know your food costs right then and there.
And now you’re in a position to make change.
How about number five ideal versus actual cost analysis? Perhaps the most critical feature is in this software is its ability to compare theoretical food cost what you should have used based on recipe costing cards and what your customers actually purchase with what actually left the shelves based on beginning inventory plus purchases minus ending gives us use that use you hopefully sold it but could have been stolen, wasted spoiled. This analysis highlights variances excuse me variances caused by waste that are in efficiencies.
By understanding these discrepancies you can implement targeted improvements, tighten controls and dramatically reduce waste.
See what knowledge you have power when you know where you’re faltering. When you can look at it and say, Hey, I was supposed to use 350 pounds of chicken based on what my recipes call for and what my customers actually ordered. But I actually use based on inventory beginning inventory plus purchases minus seven gives us use I actually used 400 pounds of chicken. I can literally highlight that line item. Remember when I earlier said I don’t believe in using your chart of accounts as this how much poultry we bought, how much beef we bought, how much produce and dairy and so on. Why because this report changes everything. Because I don’t have to say chef Why is your food cost high? You can run a report and highlight 1235 line items ago. These are the recipes. These are the products we need to fix. Go check those recipes. Go check your prep system, go checked our ordering system, make sure we’re utilizing the product properly.
The strategic implementation of software goes beyond mere cost savings. It’s about embedding the best practices into the fabric of your operation. You’ll see improvements in pricing strategies, portion control, and even menu design. Additionally, the data collected helps forecast trends and guest preferences allowing for dynamic menu adjustments that cater to your customers evolving tastes.
Let me address some common misconceptions. I hear concerns about the complexity of new software systems.
Yes, there’s a learning curve. But think about the first time you learned a complex recipe or tackle the challenge of kitchen setup. It was daunting at first right? But with practice, it became second nature. Food costing software is similar initial setup and training required required that requires effort. But the resulting consequence, if you will, the benefit becomes ease of operation and insight. And all of a sudden you go man it was well worth that effort I put in place.
Plus, with your user friendly interfaces nowadays, because of all these apps we get to use on our phones and our tablets and so on. It makes it very simple for most people to just jump in and kind of make their way through it. Making it really a robust system. These tools are more accessible than ever.
And what do you do if you currently don’t have food costing software?
To truly understand the impact of food costing software, you need to see it in action. And I’m going to tell you I recommend starting with margin is known for its comprehensive approach to food and beverage management. Now you can visit them at www dot Marjan ed.com Ford slash DSP for David Scott Peters, to actually set up a demo or chat with Bruce Earl who brings over three decades of industry experience to his consultation. He’s not just a sales rep. He’s a restaurant from someone who understands the challenges and goals that every restaurant faces.
Now I’m going to be very clear, wants you to know that I do not get paid in any way for this endorsement or referral. I’m sending you there because it’s where I send all of my members and I send you to Bruce so that you have a 30 year restaurant pro talking to you that you know you can trust. What he says is real life he gets it. So go to margin edge.com forward slash DSP for David Scott Peters, and set up that demo today.
Do you know embracing food cost software is a transformative step for any restaurant serious about optimizing costs and evaluating profits. It’s a it’s about more than just tracking numbers. It’s about gaining the insight and controls necessary to operate at peak efficiencies.
Now I want to thank you for joining me on the restaurant prosperity formula podcast I want you to stay passionate about your culinary ventures. And remember, strategic investments like food costing software are the stepping stones to long term success. Until next time, cheers.
Hey, that was an awesome episode. I want to thank you for taking the time to take action on building a better more prosperous restaurant.
Before you go. I want to give you these three thoughts. One by combining leadership and taking action with systems and training being checked by accountability. You are on your way to creating prosperity for you and your restaurant, too. I something I need from you. Please leave a review on Apple podcasts, Spotify or wherever you happen to listen to podcasts. By leaving us review other restaurant pros seeking out this information are able to find it. I read the reviews and hearing how this information has benefited you. does wonders for me. And three, if you find any of the discussions helpful share them, the more restaurant pros who have access to them, the better we become as an industry. For more restaurant resources or to get in contact with me. Connect with me at David Scott peters.com. Be passionate about what you’re doing. Be persistent, but more importantly become better and help everyone around you become better and your restaurant is going to kick some ass.