The money captured from the sale of food is the epicenter of every restaurant’s monetary flow. From here, the flow starts as you pay off all expenses and are left with the reward of all your hard work.
In 38 years in all sorts of restaurants, I’ve never had anyone tell me of a flawless way to manipulate food cost without either losing money or losing customers. Every restaurateur in every market has his or her own method, systems and procedures to attain that ghostly apparition of the perfect food cost.
Because I’ve encountered some restaurateurs who would rather have a concrete food cost for every item on the menu and others who would rather have a more flexible food costing to generate more business, I’ve learned to balance my menu mix with a “trust, but verify” attitude and an unusual perspective.
I envision myself as the driver of a full school bus. The behavior of the kids on my bus is fairly predictable –– that little guy named “Rent” sits behind me and I only need to placate him once a month. In back of him are “Water,” “Electric” and “Marketing.” The only two unruly kids that are constantly causing trouble are “Food” and “Labor.” Each time I look at that mirror above me, one (or both) of them is creating chaos. I wish I could just drive the bus down the road, keep my head down and ignore them, but they would eventually cause the bus to crash. Of these two rascals, food (cost) is by far the hardest to reign in because cost of food affects my bottom line, which is my fuel. He is the biggest bully on the bus!
Let’s talk taming the bully. It’s very easy to ignore the pennies that lead to dollars. By not checking food pricing and daily invoices, you can be overlooking price spikes, weight changes or new packaging configurations. If you don’t have good food-cost software, I urge you to consider it or go back to your menu and start at the beginning, with every item of food you sell.
Let’s start with Asiago cheese and take this single component to pizza town:
- I pay $23.59 for two five-pound bags of Asiago cheese.
- $23.59 divided by two bags is $11.76.
- $11.76 divided by five pounds is $2.36 a pound.
- $2.36 divided by 16 ounces is 15 cents an ounce.
- I use 3 ounces on each Asiago Cream Pizza, so 15 cents x 3 = 45 cents per pizza.
Seems simple enough? Let’s do the whole pizza costing for our Asiago Cream Chicken Pie:
- 19 ounces of dough x 2.1 cents per ounce = 40 cents.
- 2 ounces of Béchamel cream sauce at 19 cents per ounce = 8 cents.
- 6 ounces of our house blend cheese x 15 cents per ounce = 90 cents.
- 3 ounces of fresh spinach x 09 cents per ounce = 27 cents.
- 5 ounces of diced chicken at
- 21 cents per ounce = $1.05.
- Asiago cheese = 45 cents.
- Large pizza box, (yes, I ALWAYS include my boxes in per-pizza food costing) = 38 cents.
Do the math and you’ll see that it costs me $3.83 to make a large Asiago Cream Chicken Pie.
Now we consider the dreaded food cost factors. Before we price this pizza out, here is the twisted web of questions that affect food cost thinking.
- Is the name marketable? Could I name it the “Chick-talian” or the “Foghorn Leghorn?” I have found that any cool name is better than a description. Go with your branding. Get creative!
- What will your customers pay? It’s tough to educate people about new products. If you go this route, you may have to give away product. Luckily with all the culinary programs now, everyone seems more interested to try new items.
- What will your purveyors sell the items for? If you keep the communication open with your purveyors and tell them you expect to sell a lot of Asiago cheese, they may bring the price down.
- How aggressive are you with both? Letting your customers taste new and exciting products will move the new pizza and keeping on your purveyors for better pricing won’t hurt.
- How popular are the items on the pizza? If you stay ahead of trends, you will trump your market. If no one has this pizza, they have to come to you, right?
- How many times do you use the items on this pizza? My rule is to use each item on at least five pizzas, sandwiches or salads. This will ensure freshness and movement, which will convince your purveyors to give you discounts.
- Weight of product. Always find out the drained weight of product.
- Size of product. Does your item have a good “spread” on a pizza? Large items cannot be eaten on every slice.
- Strength of taste. Get educated on taste compatibility of items; sometimes one extra item can transform a pizza! This also can partner with the weight versus flavor consideration. The best bang for buck I’ve ever encountered is the Habeñero pepper and strong cheeses.
- Market attraction. Do your customers care about local ingredients, organic items, tomatoes packed fresh, aged cheeses? Mine do. Kick this into your marketing program.
- Prep and holding time. How long does this item hold while building my sales?
Let’s price out a new pizza: The Foghorn Leghorn (remember, $3.83 is my cost):
- Sold at $9.99 = 38-percent food cost (or) $6.16 profit
- Sold at $12.99 = 29-percent food cost (or) $9.16 profit
- Sold at $18.99 = 10-percent food cost (or) $15.16 profit.
By using the factors above, you must decide which price is both perfect for your market and for you. Don’t let the cost of food ever bully you around again.
John Gutekanst owns Avalanche Pizza in Athens, Ohio, and has a pizza blog called “Pizza Goon.” He is an award-winning pizzaiolo, baker, teacher, speaker and has been featured in a number of national publications.