February 1, 2018 |

Food Cost Basics to Next Level Practices

By Pizza Today

Sweat the details or sweat the results

I don’t play golf, but there is a phrase I am well aware of in golf that says, “drive for show, putt for dough.”  That translates to the pizza realm in that all the glitz, awards, accolades and every hipster fan from here to Williamsburg won’t matter unless your costs are under control. Labor, utilities and the cornerstone of the trifecta –– food cost –– have to hit their numbers if you ever want to get paid for all this effort.

So let’s break down some basics, and take a look at managing your food cost.

First things first, though. The “four basics” of an organized kitchen:

• Organized placement. An organized kitchen is a cost-effective kitchen. If bags of Parmesan end up in multiple places, then come order time, you’re likely to over buy. You and your staff should be able to see every item you have on your dry shelves and in your walk-in from the vantage point of the ground in front of them. If you have one item in front of another item, then staff will inevitably not see it and order more, let it go bad or go to the supermarket in a rush not knowing you already have it. For items in boxes, like paper towels, cut the tops off and flip it sideways so anyone can see that the box has only two rolls, not 12, to avoid assuming you have product you don’t have.

• FIFO: first in, first out. This is restaurant 101. With that said, I still see it done poorly at a lot of kitchens. Unopened items should be organized by date and in long lines with nothing in front of it blocking the vantage point. If you get more of that product in, for instance milk cartons, they go to the back of the line. Now on to products made in house. These have to have a LARGE label with the date, who prepped it and the name of the product. You can use day dots, but names of the staff and the item’s name are important. It alleviates ambiguity. Once that is done it should be stored in order of date to do a proper FIFO process. Electric food labels are getting popular, and with good reason. It makes sure you know who made the product and when. They are also easy to read.

• KISS: Keep it simple, stupid. Or if you are being nice, keep it simple and stupid. For food cost, and any process, make it fool-proof and simple enough to be followed day in and day out without failure. Here’s an example. If your store uses kids’ crayons and needs to stock them, then don’t have a par sheet with 486 crayons listed as your par for the week. Keep it to one case unopened. That way, you know when a box gets opened it’s time to order up.

• Pars and toothpaste logic. Pars are the tightrope string of a restaurant. You want to keep enough product in stock to not run out, but you don’t want so much that it goes bad –– or worse yet, is wasted. That’s where toothpaste logic comes into play. When you have a massive five-pack of toothpaste, it’s likely you coat the brush with enough tooth goo to caulk a bathtub. Staff can be the same way. They see you have tons of two-liters of soda. What’s the big deal if we give a few extra away or take a few ourselves? Same goes for product on your line. Excessive amounts of anything can lead staff to think you have extra to burn, like 10 gallons of floor cleaner so staff uses the cleaner non-diluted and kills a whole gallon because it’s easier to clean that way. These examples are real and happen all the time, so keep the pars effective, but tight. Make staff feel like it’s that last bit of toothpaste on hand to only use what they need.

• Inventory. The next level to consider is a real up-to-date inventory –– not just a percentage of what was purchased versus what was sold, but actual inventory. Percentage sold leads to the food-cost roller coaster where your staff orders up one week, blows food costs and then next week is under because they are using last week’s overage.

True food cost takes recipe building of all your pizzas and entrées (and, more importantly, your prep items). If you make meatballs from scratch, you have to price out all the ingredients to make a batch and then divide it by the number of meatballs you get from a batch to know the cost of one meatball. That price will change each week with the cost of beef and your ingredients.

To know how much you purchased versus what you sold, you need to put in the work, get a solid Excel food-cost sheet, or buy an inventory program. No matter what you do, you can do this. But it requires entering the data I talked about earlier and that is not as flashy. Yet it’s necessary to survive in this business.

• D.R.I. Another thing I believe in is having a directly responsible individual –– or D.R.I. –– for all tasks. Food costs should be assigned to the general manager or kitchen manager. Ideally the person responsible for the food cost does all of your food ordering for that location. That way they know what they have on hand, what they have ordered, and that it’s their responsibility to hit the number. Shared blame equals blanket failure. 


A point-of-sale system is a must for proper food cost. It’s the only way to really know what you sold to base real numbers of what you purchased against. When this is set up well, it can tell you what you sold versus your theoretical food costs. This only happens if you update the costs for each item based on your invoices’ changing prices. In addition, a POS ticket must be sacred in your kitchen. That means nothing –– and I mean NOTHING –– gets made without a ticket. Otherwise a server can call for a pizza, then keep it for themselves. Only managers responsible for that store’s profit-and-loss statement should have authority to comp something, and you must go through those comps as an owner and dissect the reasoning. False coupons, tons of trades or free gift cards can destroy a food cost number quick.

Mike Bausch owns Andolini’s Pizza in Tulsa, Oklahoma and is a frequent speaker for the Pizza Expo family of trade shows.