3 Smart Strategies to Help Manage Your Restaurant’s Food Costs

Shrewd management of food costs is critical to any restaurant’s success. It won’t matter if your service and menu items are outstanding if you’re not making enough of a profit margin with the ingredients to come out on top. Fortunately, there are a number of food cost reduction strategies you can employ to reduce waste and help add some cushion to your bottom line.

Waste Management Is Crucial to Trimming Food Costs

One of the simplest, cheapest things you can do you reduce your restaurant’s food costs is to implement an effective waste management program. Some restaurants do this by using tracking software that weighs everything out, keeps tabs on the inventory in use and tracks the amount of waste being produced. Others do this by not letting any little scrap go to waste. For instance: citrus skins can become marmalade, piths can become lemon cream, pits of peaches and plums can be used for cocktail bitters, watermelon rinds can be pickled, food prep trim can be made into stock—you get the idea. It is estimated that 2-3% of the average restaurant’s food costs go out the door as waste. You’d be surprised how much your food costs can be mitigated by simply being more conscientious about managing that waste more effectively. Make sure to communicate with your staff about why waste management is so important as well: getting their buy-in is also critical to the success of your food cost reduction strategies!

Reducing Restaurant Food Costs in Pricing & Purchasing

Despite rising costs in food, labor and energy, many restaurant operators resist raising menu prices for fear of losing customers. While the concern is valid, increasing menu prices is an inevitable result of rising costs. Fortunately, there is a way this can be done with minimal resistance from your consumer base. For instance, research has shown that consumers seeking indulgences (think espressos or high end burgers) are not as sensitive to price increases. Consumers are also more likely to embrace a price increase if it comes in the form of a new menu item, or as a restructuring of an old favorite.

Reducing costs in the purchasing category of overall food costs often comes down to having a solid relationship with your suppliers. It’s important to prioritize key ingredients and then establish genuine partnerships with the vendors who supply them. Suppliers often have alternative options for inventory. It makes sense, therefore, to have a good relationship with them. You want those guys on your side. Top-to-top relationships are essential and partnerships should be entered cautiously. Other options to reduce costs in purchasing include looking for rebates or bundling offers on key products, purchasing the food in a form that results in less labor and/or waste, joining a purchasing cooperative or simply switching vendors.

Reducing Restaurant Food Costs on the Plate

In terms of strategies to reduce food costs on the plate itself, you could try using smaller portions, lower-cost proteins or lower-cost sides. You could increase the focus on sides to allow for a smaller or less-expensive protein. Remember that value perception has a lot to do with “trips to mouth.”You can enhance that perception while simultaneously decreasing food costs by choosing a side item that increases the number of times the fork goes into the mouth.

The cost of food is out of our control, but the way that we manage our food costs is not. Reducing waste and getting smarter about the ingredients you use can make a world of difference in increasing your bottom line.

3 Factors Affecting the Price of Commodities for Restaurants in 2014

With the exception of beef, the beginning of 2014 initially looked like it would be a fairly moderate year in terms of rising commodity costs. The last few months, however, have seen record highs in several staple commodities, causing many restaurant operators to have concern over additional inflation in the coming months. Although the U.S. Department of Agriculture forecasts that overall food inflation this year will be between 2.5% and 3.5%, sharp spikes in certain commodities may have restaurateurs looking for other options to offer on their menus and setting up strategies to control costs. Here is an overview of a few factors effecting the cost of commodities in 2014.

Global Demand Drives up Commodity Costs

So far in 2014, U.S. exports are rising and global demand is continuing to drive up the cost of commodities—cheeses, in particular, have hit record highs. For example, the price of Chicago Mercantile Exchange block cheddar cheeses is typically below $2 per pound, but has already soared to more than $2.40 a pound in the first quarter of 2014. Of course, as the climate changes and the world struggles to feed its swelling population, global demand will continue to be a major factor in the cost of commodities.

Drought and Disease Continue to Spike Commodity Prices

Drought and disease have already made their mark on this year’s commodity prices. An outbreak of PEDv (porcine epidemic diarrhea virus), which kills whole litters of piglets, recently drove pork prices to record highs. Since it takes pigs about six months to grow to slaughter weight, it is estimated that the disease will most affect pork inventory this upcoming June through September.

The drought in Brazil has spiked the cost of coffee, sugar and soy products. Coffee has been particularly effected. A drought condition known as Coraçao Negro (“black heart”) causes the beans, which are normally green, to become black and shriveled, and has already been found in some of the drier, northern regions of the country. The effects of the drought are unlikely to reflect in 2014 wholesale coffee prices but are showing in commodity costs. It’s possible that commodity coffee future prices could rise to over $3 per pound if the August harvest in Brazil is poor. Drought in California has further raised the price of feed, which, in turn, is pushing more beef and dairy producers to slaughter their cattle rather than pay to feed them.

Beef Prices Will Continue to Soar

Drought has been wreaking havoc with the price of cattle feed such as corn and hay for the last several years. Dams have dried up, pastures have withered away and with the impossibly high cost of feed, many ranchers have been left with no other option than to liquidate their herds. As a result, the U.S. cattle supply is currently at the lowest level that it has been since 1951. In February of this year, the retail value of “all-fresh”USDA choice-grade beef jumped to a record $5.28 per pound. This same grade of beef cost $3.97 as recently as 2008. Even though conditions in some parts of the cattle producing regions of the U.S. improved in 2013, it is unlikely that the cost of beef will go down anytime soon. Many ranchers may not be in a position to increase their herd numbers after so much liquidation, and those that can still have to wait the two years that it takes to bring a calf to slaughter weight.

Restaurant operators know that food prices are anything but predictable. When spikes in commodity prices occur, the best you can do is have management strategies in place that will help you control your costs and retain your profit margins.

Restaurants Host Classes as a Creative Way to Develop Relationships and Encourage Loyalty

As a restaurant operator, building a relationship with your customers that encourages loyalty and traffic is paramount to your success. One easy and fun way to do that is to host classes about the thing you do best: food (or drinks!). If you’ve got someone on staff with a little charisma, these classes can become cornerstones for bringing new clientele into your restaurant. They can also help strengthen your relationship with consumers who already give their patronage.

Restaurants Teach Customers How to Make “The Secret Sauce”

Most restaurants have an item or two that they are particularly well known for. It’s no surprise that customers who love it would also love to know how to make it for themselves. Whether you decide to reveal how to make that specialty item that everyone drools over is up to you. Alternatively, you can simply host monthly food classes, featuring a few courses and some drinks.There’s no shortage of opportunities for how your restaurant could put together a fun and engaging food class for your customers’ enjoyment.

Food prep is another area in which to consider hosting a class. Take butchering and meat preparation, for instance. There is a certain segment of the populace (think bachelor parties, for example) that would jump at the chance to do a 2-3 hour demo on how to professionally butcher and grill an assortment of meats and fish. Especially if you included a burger meal in the restaurant afterward and the option to purchase at a discount whatever was butchered in the class. 

Restaurant Mixology Classes Teach Customers to Drink with Flair

Another easy and fun area for restaurants to share their expertise lies in the arena of drinks and cocktails. Mixology classes that teach customers how to make, say, “The Top 20 Drinks Everyone Should Know How To Make,” provides instruction on how to properly taste spirits.Or, even simply showing them how to properly set up a bar can make for fun engaging afternoons that generate a lot of both on-site and referred business.

Avenues to Market Restaurant Classes

Although hosting food classes in your restaurant could improve your sales and traffic, the main purpose is to strengthen your business relationship with your customers; building loyalty and customer engagement. As such, you’ll want to keep that in mind as you look for places to promote your class opportunity. While traditional forms of marketing, such as radio or print ads, are effective, other forms of marketing such as community billboards and local class listings can be equally so. Social media can also be particularly helpful in spreading the word and getting people excited about your new class. Everyone loves to post pictures of themselves doing something cool.

In sum, hosting classes in your restaurant can be an easy way to connect with your customers. You could put on something big, with a lot of bells and whistles, or you could do something grass-roots and casual, according to your restaurant’s particular flavor. Either way, focus on creating a fun and memorable experience that customers will leave telling their friends about!

A Look at Restaurant Employment in 2014

The restaurant industry lost a lot of jobs when the recession hit. It took until September of 2011 for it to surpass its pre-recession peak. It now stands above the previous high at nearly 900,000 jobs, or 9.2% of the U.S. job market. Job growth in the industry is expected to remain positive, and it could prove more difficult for employers to hire new staff in 2014 than it has been in the last few years, thanks to an increasingly competitive job market.

The Restaurant Industry Contributes Significantly to Job Growth

The U.S. added a total of 2.2 million new jobs in 2013. Over 306,000 of these jobs were in foodservice. That figures out to be about 1 in every 7 new jobs being attributed to the foodservice industry. In March of this year alone, the restaurant industry has added a total of 30,000 more jobs to the economy. Some critics, however, say that this contribution isn’t as significant as it would appear due to the fact that foodservice workers tend to make much lower wages than the average U.S. worker. Nonetheless, the restaurant industry is expected to continue adding jobs to the economy in 2014, though the competition to hire good employees may get stiffer.

Turnover Rates Are Higher; More Difficulty in Hiring Waitstaff Expected

While the overall U.S. unemployment rate dropped to a five-year low of 6.7 percent last December, the turnover rates for all segments rose. Some are calling the dropping unemployment rates, increased turnover and abundance of new companies looking to hire, a recipe for recruiting difficulty. The labor market is nowhere near as flooded as it was a few years ago, and restaurant operators should be aware that it may be increasingly difficult to hire for some time to come.

Restaurant Operators Should Invest in Employees They Want to Keep

Knowing the possibility that hiring could become more difficult, it makes sense for restaurant operators to put measures in place to retain the good employees they already have. Whether this means more benefits, higher pay or better perks, restaurants around the country are recognizing the value of investing in an already trained and tested staff member over the amount of effort and money required to attract and train someone new.

Better pay and benefits isn’t the only thing that keeps good employees around, either. In fact, an employee’s decision to stay with your restaurant business often has more to do with the work environment they experience with you than any other factor. Creating a supportive, fun, team-oriented environment is critical to the success of any business; but especially so for restaurants.

Your waitstaff is the representation of your business to the public and your staff is the oil that makes the gears go around. Taking the time to listen to employee feedback and concerns, giving regular positive feedback on the work an employee does and fostering an environment of openness and support will go a long way toward demonstrating your commitment and interest in the well-being of your employees. Sincere concern fosters loyalty in your staff that shines through in their work with your customers.

The restaurant industry is expected to continue its steady upward growth, and operators should be aware of an increasingly competitive hiring environment in 2014 and beyond. In the face of such difficulty, it makes a lot of sense for restaurant operators to do what they can to retain and foster the exceptional people already in their employ.

3 Tips to Rev Up Special Offers and Successfully Introduce New Menu Items Through Social Media

One of the best aspects about social media is that it allows you to communicate with your restaurant’s customers instantaneously. This makes introducing new offers and menu updates a cinch. If it’s done correctly, social media can be a powerful tool to get your audience talking, induce incremental visits to your restaurant and build a loyal customer base. Here are three tips that will help to rev up your social media efforts, whether it is to introduce new items or simply better engage your community.

Design a Web Based Restaurant Menu, Optimized for Mobile

The most critical aspect of a successful online campaign, social media or not, is of course having a website that is properly designed and optimized for the web—and these days, that means optimized for mobile web viewing as well. Make sure that your menu, in particular, is web based and not a PDF. Web pages are easier to share on social media than PDFs, and they are easier for search engine bots to categorize and return as a search result. Social media sites can also pull more information, such as pictures, titles and descriptions, to include along with the post from a web page than it can from a PDF.

Smartphone use is, in some ways, driving the growth of social media, and it’s also critical that your webpages are properly designed for mobile if you want to properly utilize this form of marketing. Make a paired-down, to-the-point version of your site that is easy to read and takes customers to the information they’re looking for with as little hassle as possible.

A Good Picture of Your Restaurant’s Food Is Worth a Thousand Words

Nothing gets people interested in a new item more than a good picture of the taste-bud stimulating delight that awaits if they visit your restaurant. All social media networks have a strong visual component; some are designed exclusively around the sharing of images (Pinterest or Instagram, for example.) Posts that get shared are almost always those with a good picture. What this means is that it’s worth it for you to invest in a little professionally done food photography of your menu offerings. Send them through your social media platforms and post them on your website. Make sure to include sharing buttons to let people easily pass those mouth-watering photos around.

Take it a step further and install a “photo op” where people can take fun pictures of themselves at your restaurant and post it to their own social media sites. Or, consider rewarding people for posting their own images of themselves or the food in your restaurant to their social media channels.

Partner Your Restaurant with Other Businesses to Promote New Items

Another great way to rev up interest in new menu offerings is to promote them by partnering with a business, group or well-known individual in your community. For example, you might ask a local celebrity to describe his or her favorite dish and then create a version of it in their honor that you can promote. In another example, you could partner with a local charity and donate a portion of the specially created menu item to a fundraiser on their behalf.

The options are truly unlimited, in terms of utilizing social media to create buzz about your menus and service offerings. The key is making sure that what you’re trying to share is interesting and of benefit for the customer to know, is visually appealing and is optimized for easy online and mobile viewing.