Eating out is an activity many people love to do, and some say this is an industry that will never die. However, as a restaurant owner, things aren’t as easy as it seems. A foolproof recipe to succeed in the industry is not to compromise on food quality. But how to reduce food cost in a restaurant without compromising? Today we are going to have a look at a couple of solutions for this issue.

How to Reduce Food Cost in a Restaurant 101

1. Keep Track of the Food Prices

A good strategy, if you want to know how to reduce food cost in a restaurant, is to keep an eye on the food prices and predictions. For example, you can see how the prices for eggs, beef, or chicken are expected to behave. Then, adjust your menu accordingly. Use affordable alternatives, such as inexpensive cuts of meat, and include more egg options when the prices are down.

2. Conduct Inventory Regularly

Do you know exactly where the food you buy is going? If you don’t, you should conduct an inventory regularly and consistently. Do this with food, beverages and other serving supplies every week. In this way, you can stay on top of the food usage, as well as all the other associated costs. Moreover, you can see what’s used, lost, or even stolen. Next, you can decide the menu item prices and see if you get any more profit. You can also assess how much you should order so your ingredients don’t spoil.

3. Purchase in a Group

It’s a good idea to join a purchasing group to save up some money on food. Given the volume of the purchase, suppliers are willing to lower the prices. This is how independent restaurants manage to compete with other chains that have a massive purchasing power, as well as various options to negotiate.

4. Prepare Your Own Food

A good idea if you’re wondering how to reduce food cost in a restaurant is to use more prepared food. For example, instead of buying lettuce that is already chopped, buy the heads and cut them yourself. Or instead of buying hamburger patties from the store, make your own. You can also cut the chicken yourself. We all know that prepared food costs more, but make sure the labor costs included here are lower than the previous ones.

5. Look at the Produce Specifications

Another mistake that can cost you a lot of money is not looking at produce specifications. For instance, if you need to make guacamole, do you really need the highest quality of avocado? If it has good taste, don’t worry about the aspect of the produce. Similarly, check what other cheaper alternatives you have for regular products, such as bread, potatoes, etc.

how to reduce food cost in a restaurant chart with comparison

Illustration showing the different prices for ingredients for a hamburger in 1985 and in 2015. Image courtesy of

6. Manage Waste Cleverly

Just like you are holding an inventory of the resources you have, you should also keep track of the waste you are producing. Write down the following:

  • Extra portion sizes that are thrown away;
  • Food returned because it was not made well;
  • Dishes that were burned;
  • Food that was spilled on the floor or in the kitchen.

Once you are aware of all this, you can make the necessary changes. Perhaps you need to hire a new cook, cut down on the portions you are offering or stop rushing the staff to make the food. Which leads us to…

7. Portion Food Adequately

The goal here is to offer people the right amount of food, not over, not less. However, this is a hard thing to achieve. If you want to work on this, keep an eye on the plates that come back to the kitchen. Are they filled with food? Are people asking to take their leftovers home too often? If yes, you may be oversizing your portions. Improving the menu is an endless job, which is why you need to pay attention to the plates.

8. Set the Right Price

The menu price is one of the most important aspects both for the restaurant owner and for the customers. If you set a reasonable price, most likely people will come back. However, the prices also need to reflect your spending. Consider direct costs (purchase price, food waste, portion sizes, overcooking, etc.) and indirect ones (the perceived value of the food). Overhead costs, volatile food costs, as well as prep time and labor costs, should also be included. Finally, pay attention to the prices set by your competition as well.

9. Use the FIFO Method

Another smart thing you can do if you want to know how to reduce food cost in a restaurant is to use the FIFO method. The name comes from First In, First Out, and the method relies on using the first ingredients you put in the pantry and refrigerator first. This makes you sure that there’s no expired food left behind, so you’re not wasting money on fresh ingredients.

10. Use Daily Specials

This is a great trick that helps you get rid of any extra food you have left over. See what ingredients are stacking up in the pantry and come up with a recipe that includes all of them. Then, feature it as a daily special and set it at a special price. People usually love to order combos or special items, so they might want to order it. At the same time, try to talk to the stuff and ask them to recommend the dish to the customers that day.

Here you can watch a short clip with other cost-saving ideas:

To draw a conclusion, it’s not that hard to learn how to reduce food cost in a restaurant. All you need to do is to start organizing yourself better. Get some sheets and tables and start monitoring everything that comes in and out of your restaurant. Have a look at your competitors as well. Try to learn what are they doing to cut down on the costs. In this way, you can find out a lot of tricks, learn about purchasing groups, and so on.

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