Key System to Lower Restaurant Food Cost 2-3 Points
Is your food cost getting a little out of control? Are you afraid to let somebody else order product because they over order and spend your cash? Would you like to have a life and get to leave your business? Well, watch this video or keep scrolling to read and learn the system I teach to use to lower your restaurant food cost 2-3 points overnight.
I’m going to cover a key food purchasing system in this video: the restaurant purchase allotment system.
To start, I have changed people's lives with this one simple system. I've seen their profitability go up two to three points, sometimes as high as nine points, without heavy lifting, without recipe costing cards, without shelf-to-sheet inventory, holding management so accountable that they don’t dare step outside the boundaries you have in place.
Imagine your designated manager now only places an order on a budget. In most restaurants when there is a problem, the solution is to write a check. Ask the chef, “Why is your food cost off, Chef?” The answer comes back, “I don't know.” So you write a check to make sure you have enough food. You fix every problem in your business by writing a check, which means you can never leave. You can't give up ordering. You don't have money to pay your bills.
My solution is the Restaurant Checkbook Guardian, a purchase allotment system. It's based on four rules.
- You have to have a budget so you know your target cost of goods sold target for food cost and pour cost based on bottled beer, draft beer, wine and liquor.
- You have average inventory levels so that if I use $300 in product, you can replace $300 in product.
- You have forecasted sales by day of the week. You look a month out and know your holidays and so on.
- You track your sales on a daily basis. You know what your food sales are, your bottled beer, draft beer, wine and liquor.
And in doing so, by putting that data in five minutes a day, these are things you do on a daily basis. In the video, I show you a spreadsheet, which tells your manager how much money they can order on their next order. And it's going to get them not only if it's a Monday for Tuesday delivery and then you’ve got a Thursday for Friday delivery and it's Monday, it’s actually going to give you the ability go down to that next Friday delivery day to make sure you have enough food to replace what left the shelves, order more so by the time you get to that second delivery day, if your delivery shows up late, you still have three days’ worth of food on your shelf. You're never in a position that you can't make it. It is unbelievable.
What does it do? It gives you the ability to say, hey, you cannot place an order that's more than a dollar amount you assign. I always use $500 as an example, but you can pick what works for you.
With this flexibility, your manager can buy that specialty item or take advantage of not breaking case to get a better price and so on. But now it forces them, your chef, your kitchen manager, your bar manager, if they need to order more than what they see as their budget, they need to find the problem that brought them to that point. Is there waste, is there theft, is there spoilage. They job is to fix it today.
And ultimately, even if they do a great job doing that, you still have control. You can hold that checkbook tight to your chest, and you can say no, you can't place that order. Great job finding the problem, but I don't have money today. Instruct them to place the order at the budgeted number and then order a second order in two days. Use the money coming in, but don’t use money you don’t have.
The Restaurant Checkbook Guardian gives you power to make a change.
I cover Restaurant 101, putting systems in place and more in my book. Order your copy of Restaurant Prosperity Formula: What Successful Restaurateurs Do here.
You can also complete a free restaurant evaluation. It's a great way to identify immediate opportunities where you can make things better in your restaurant.
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