skip to Main Content

Food Cost Smarter. Not Harder.

Using reciProfity will help you improve your restaurant education and food IQ instantly, but no software can replace your good ol’ brain power when it comes to thinking on your feet and overcoming everyday challenges.

  1. How do I make food costing work for me
  2. How do I make my kitchen staff understand its importance
  3. How do I deal with kitchen staff issues
  4. How do I look for price creep

In an effort to make our customers some of the smartest businesses out there use this blog to keep your cranium as sharp as the knives in your kitchen. You can find a lot of the same how to’s on other websites, we’d like to offer you some real insight into how owners think about their businesses. 

 

Start with Food Costing 101 – The Magic of Restaurant Software and Food and Recipe Costing.

 

reciProfity Inventory Management for Commissaries and Retail Prepared Foods

The latest in inventory management technology

During the pandemic, companies all along the food supply chain have found it more important than ever to keep an accurate eye on inventory control, said Matthew Starobin, president and CEO of Bronxville, New York-based At-Your-Service Software Inc., makers of cloud-based ReciProfity food costing software.

“Businesses are under more stress now, their costs. People are not spending money the way they used to, and for them to be able to manage costs in any shape or form is more important than ever,” he said. “From inventory control to other issues, it’s front burner. Companies don’t want to lay people off if they don’t have to.”

For commissaries, central kitchens and retailers who make prepared foods onsite, inventory management can be especially critical, Starobin said. A baker planning on making a recipe that includes blueberries, for instance, may be using data from months before when costing his blueberries. That can negatively impact the bottom line and inventory levels.

New cloud-based tool for commissaries

New for At-Your-Service is a reciProfity that is especially helpful for commissaries, central kitchens and other offsite facilities provided prepared and other foods to grocery retailers.

The old version ran on the company’s server-based inventory management system. When At-Your-Service went 100% cloud-based, converting the service went on the back burner, Starobin said.

But increased demand from a growing commissary industry put it back front and center.

“We’re selling to enough bigger companies now,” Starobin said. “Users who had a single store are getting to the point where they have three, four stores, the magic number where they feel the need for a central kitchen.”

The commissary-specific software’s advantage is providing instant updates to recipes, regardless of their size. With Reciprofity, commissary and other offsite users can know the exact quantities of all ingredients and have them ordered instantly, keeping inventory accurate and avoiding food loss.

“Commissaries are designed to consolidate, to add efficiency, but if they’re not tracking what’s going out, did we waste anything,” they’re not taking full advantage of their business model, Starobin said.

Inventory management software also helps take a lot of the guesswork out of the work commissaries and retailers face in prepared food production, Starobin said.

“One of the issues I’ve heard from stores, from kitchen people, is that when it comes time to production and you have to make a large number of sandwiches, for example, there’s a lot of guesswork in that practice. Prep people pull out what they need and they never underestimate. And once it’s out of inventory, it doesn’t go back.”

In the case of the sandwiches, that means that maybe 30 tomatoes get pulled for the order instead of the 25 that are needed. Or if it’s a fruit like cantaloupe, prep cooks aren’t as careful about getting the maximum amount of usable fruit out of each piece, because they know that they’ve likely pulled more than is needed. With inventory management software, regardless of the size of the order, kitchen managers know instantly the exact amount of each ingredient needed.

Suermarket Perimeter 10/28/20

Food Costing For Delivery, during the Pandemic or Any Time

Many of you (even before CV-19) broadened your business model to include take-out and delivery.

In the face of the pandemic, it’s no longer a choice.

And none of us really know the lasting power of the changes in the consumer behavior we’re seeing. My guess? Delivery and takeout will be a permanent, expanded segment.

Learn more about how to maintain margin dollars, which are the key to a successful food service business.

 

For Craft Beer Brewers Beer Costing is No Different than Food Costing

A craft brewery takes into account the same materials and labor as food costing, as well as the same inventory management. You’ll need to track both to be successful, breweries run the risk of losing money on missing inventory (all those small cans and bottles), not to mention the ingredients used to make the beer.

Breweries need to calculate the costs of your kegs, cans, bottles, and any containers you use. You’ll need to count your inventory, determine your sales and see if you have any variance. Make sure all that work your doing isn’t walking out the door!

This article is a great intro to costing and inventory control for breweries.

Then take a look at reciProfity and see how easily it lets you price out your beers and manage all your inventory, from ingredients through the finished product. And if you make and serve food reciProfity will calculate all your recipe costs and manage your food inventory for you.

Best Practices for Restaurant Inventory Management

What should I do first price my recipes or manage my inventory? That’s a question we’re often asked. When faced with multiple options it’s sometimes easy to get discombobulated.

If you are running a food service operation you’ll want to determine what the most pressing demands are. Is it pricing your menu? Keeping close tabs on your inventory? You can definitely do both but you’ll need to start with one.

Set your priority and use that as your guide.

  • Whichever option you choose the first thing you need to do is get your inventory entered into reciProfity. Enter all of your inventory from all of your vendors. Do this by uploading Order Guides (NOT invoices) or entering your ingredients manually.

    Now you have several choices –

    • Begin to enter your recipes so you can price them
    • Start counting your inventory

      This choice depends upon what is most important to you right now. Most users start with entering recipes so they can get a handle on menu pricing.

      If getting control of your inventory is primary then start creating locations and assigning your inventory to those locations.

  • Once you have both inventory and recipes entered you should start uploading your invoices so your recipes can be priced accurately.
  • If you have not created Locations and assigned your inventory into those locations you should do that now.
  • Are you integrating with a POS system? Now is the time to start importing your sales mix so you can get your Actual vs Ideal Inventory reports.
  • Don’t forget to take counts! This will give you accurate reporting.
  • And finally, run your inventory reports!

Food Costing Control Yields and Shrinkage

reciProfity is the only product with yield information for more than 1,000 raw food ingredients from The Book of Yields.

reciProfity does the work! You browse to your ingredient and reciProfity calculates all conversions, yields and after shrinkage pricing. Then we use that after shrinkage price in your recipes for the most accurate costing.

The Book of Yields is the chef’s best resource for planning, costing, and preparing food more quickly and accurately.  It’s an unmatched compilation of measurements, including weight-to-volume equivalents, trim yields, and cooking yields.

reciProfity contains this comprehensive collection of accurate food measurements, it’s the foodservice managers most powerful tool for controlling costs.

From within an ingredient click Select Book of Yields Conversion.

Then choose the ingredient you want.

 

reciProfity uses the the conversions in your recipes (weight to volume, volume to weight and any After Shrinkage price). You don’t need to do any of the work!

 

 

 

Want to see more?

Food Costing 101

reciProfity is recipe costing software that does the food costing math for you. So it seems like magic!

The Basics Of Recipe And Food Costing Magic (Math)

If you’ve been running restaurants for years and doing restaurant food costing you’re likely already profitable and are using reciProfity to cost out your recipes and cut down on your admin work. But if you’re newer to the game, these articles will teach you how to conquer the profitability puzzle.

Here’s a quick primer on restaurant math: Spend 30% of your revenue on food and drinks to sell to your customers. Spend another 30% on your staff. Spend 20% on everything else: rent, electricity, gas, insurance, taxes, linen, maintenance, repairs, and light bulbs. Roll 10% back into the business to make it better and put 10% in your pocket. You’ve earned it.

To get this math right, it’s absolutely essential to have an accurate Food Cost. This is the most basic purpose of reciProfity. In other businesses this is called the Cost of Goods Sold (COGS) or Cost of Sales. Your Food Costing can be expressed in two ways:

  1. As a number: exactly how much money do you pay for the ingredients in a recipe?
  2. As a percentage: what percent of a recipe’s sales price goes to paying for its ingredients?

Learn To Speak Like A Recipe And Food Costing Pro

Here are some other terms you should know before we get into menu pricing strategies:

  • Fixed Costs, or Overhead, are the expenses connected with opening and operating your business every day. This includes rent, electricity, gas, insurance, and anything else that stays the same (or almost the same) regardless of your sales volume.
  • Variable Costs are expenses that change directly proportionally to your sales volume. For our purposes, these are the same as Food Cost.
  • Payroll exists somewhere between Fixed Costs and Variable Costs. Even though your payroll costs vary depending on how busy you expect a service period to be, they can’t be expressed as an exact proportion of revenue so it’s not really a variable cost.
  • Gross Margin is the difference between revenue and food cost. In other words, it’s your profit AFTER paying for food but BEFORE paying your fixed costs. Also called Contribution Margin or Gross Profit.
  • Net Income is your profit after paying BOTH fixed and variable costs. From your accountant’s standpoint, this is the same as your EBITDA: earnings before interest, taxes, depreciation, and amortization.
  • Breakeven Point is the amount of revenue you need to exactly cover all your fixed costs, variable costs, and payroll. In other words, it’s a number of sales that results in exactly zero net profit/loss. Here’s how to calculate a number of sales you need to do in order to hit your breakeven point:
    • Breakeven Sales = Fixed Costs/Gross Margin %

Simple Example to illustrate these terms:

You pay $10 for a rib-eye steak and sell it for $30.
Food Cost: $10 Food Cost%: 30% Gross Margin: $20

How To Identify A Better Food And Recipe Cost Model

Once you begin to add recipes in reciProfity you’ll begin to see how we help you determine your food cost % and match it to a target.

If you see an Actual Food Cost % that is above your Target you’ll start thinking about how best to manage that.  We’re getting you off to a good start here.

Would you change the price you charge? Or modify your ingredients? Or have a talk with your supplier?

PRICING
ACTUAL TARGET
Selling Price $10.99 $12.00
Food Cost % 38.20% 35.00%
Margin $6.79 $7.80
Serving Cost $4.20

You know food costing is important BUT how do you impress that on your kitchen staff?

How To Do Food Costing for your kitchen staff?

You know why food costing is important:

  • It’s the best way to manage profits
  • Food costing protects your inventory against over plating, theft, spoilage and waste
  • Actual vs. theoretical. You know it in your head but what are the real numbers
  • Keeps on top of your vendors, watches their pricing
  • Accurately prices your recipes to reflect any price creep

You already know the answer to that if you’re looking at food costing software. It gives you a handle on what you spend and what you should be spending.

The real question is why is it important for your kitchen staff to understand the principles behind food costing? Yes, I’m sure your chef understands the concept but unless you are the chef/owner and you watch every ingredient with an eagle eye…

  1. Kitchen staff are proud of the plated food they produce.

  2. They want it to impress the customer.

  3. And sometimes, in an effort to please, they over plate.

If your chef is proud of what s/he’s sending out of the kitchen in an effort to make the plate look bountiful they may add a bit here and there. They’re thinking it’s not a real issue. But you know that over time EVERY LITTLE BIT adds up to MORE MONEY SPENT.

So how do you make your chef understand the implications?

With food costing software the answer is right in front of them:

Here is our original serving recipe. The Actual and Target food costs align beautifully at about 33% and your sales price at $22 for salmon and sides is reasonable for your area:

 

Now the chef thinks the plate looks skimpy so s/he ups the salmon from 8 oz to 12 oz. Hey, what’s 4 oz of fish? And another 2 oz of greens. That can’t cause too much trouble, right? WRONG!!

Our Yield Cost is up almost $3. And our food cost percentage is up more than 10%!!  Gee Whiz. And there’s no way you can raise the selling price to the target of $31.88.

Multiply that cost loss by the number of servings you sell a year. Now multiply that by all the other items that are overplated.

Put reciProfity in front of the chef and let the chef play with it. It’s like a game. Change the amount of an item and watch the price, yield and food cost percentage rise and fall.

Trust me, a few minutes with the software and your chef will get the message!

Why Don’t You Ever Stop Working?

 

My sous chef and I went for Mexican food with some friends last Sunday (obviously) and someone got the most amazing chiles rellenos.

 

Of course, my sous and I immediately started talking about ways we could incorporate some of these flavors into our food, especially the ridiculously delicious smoked tomato salsa.

 

We could put it on our fish tacos, it would be an excellent counterpoint to the cilantro ranch dressing. We could use it in a reimagined eggs Benedict.

 

This went on for 15 or 20 minutes until one of our friends said, “Oh my god, why don’t you guys ever stop working?”

 

It’s true; we don’t. And neither do any of the good cooks I’ve ever worked with. If we’re out at a restaurant, we’re constantly looking for things they do well that we can learn from, or for things they do badly that we can avoid doing (or gloat about, if we’re feeling smarmy).

 

I’m friendly with the chef at a great local sushi restaurant. My knife skills are rock solid, but his blow mine out of the water. So of course I jumped at the chance to have him teach me some Japanese techniques.

 

Years and years ago, when I was a young line cook at a restaurant in New York, our chef brought a whole wild boar down to the kitchen. We all stood around staring at it with our mouths wide open. This was one of the top-rated restaurants in the city full of incredibly talented cooks, and not a single one of us had any idea how to start butchering this beast.

 

The ancient Dominican dishwashers came out of the dishpit, laughed at us for a minute or two and then had the boar skinned and portioned into primals in about an hour.

 

You better believe that we watched their every move. Knowledge comes from unexpected places and you’d be crazy to pass it up.

 

That’s what I love about this business: you’re never done learning. It’s up to us to always be observing and asking questions, and to never turn it off.

 

Our significant others may not love it, but it’s how we stay on top.

Software usability so that you really DO use it!!

I’ve worked with thousands of food service operators. After explaining what our software does, I often hear this: “I need it, but…” followed by one of these two objections:

“It takes too long to get it right, assuming we do get it right”
or
My people won’t adapt to technology”

Let’s call it usability.

So although I’m not a programmer, I do work closely with development. And I constantly push them focus on two things:

– Simplicity

– Ease of use

When you analyze an app, POS system, or any other technology for purchase in your operation, pay special attention to usability. You are in a business where there’s never enough time, turnover is the norm, and technology adaptation can be bumpy. You don’t have endless resources to dedicate to analysis, integration, training, implementation, etc.

It’s all about usability: that means not chasing every bell and whistle, but really focusing on the core objectives of what you want to accomplish. And it means finding solutions that you can adapt and integrate seamlessly and painlessly. All of that adds up to usability.

I’ve told you there would be tips with my emails; these tips are some of the features that increase reciProfity’s usability. These may very well be what enables a successful deployment.

The Joys of Small Suppliers

My meat supplier, a small foodservice vendor, is an obese, cigar-chomping man with an unpronounceable name and a staff of maybe 6 guys.

His favorite hobbies include eating meat, talking about meat, and yelling at me about the Yankees, all of which he does without the cigar ever leaving his mouth.

He doesn’t have a website, a secretary, or an accounts receivable department and his office is basically a broom closet.

Sure, he doesn’t do much butchering himself anymore but he knows everything about every cut he sells and I bet he could still break down a side of beef faster than I can make a béchamel.

This guy is easily my favorite supplier.

I called him yesterday with a question about the size of the fat cap on their beef brisket and he went into the storeroom himself to check the product and get me an answer.

There’s none of this “please hold while I transfer you to some guy in the warehouse who also doesn’t know the answer,” no best guesses from uninformed sales reps, and no wondering if the full order is going to show up.

He stands behind his product and his service, and it shows.

This is why I (and plenty of other restaurants in this town) are happy to pay his slightly higher prices instead of working with the bigger, cheaper meat companies.

 

The quality of his product is also the best, but that’s to be expected from a guy like him.

 

Back To Top