101 Restaurant Secrets. Ross Inc. Boardman
If you went through that list and put a cost against each item you may see more than 10% of the whole recipe in the ingredients below the steak. So potentially at this point you could have lost an invisible slice of your margin without knowing it. However, it goes deeper than that. If you don’t cost an ingredient then you tend not to hold it as important. Something like that sprig of rosemary could be bought in small plastic packs which cost a fortune when compared with a fresh plant on the windowsill. It may only take an un-costed splash of brandy and some wild mushrooms to ensure you have a loss leader going out of the kitchen door.
Some of this may seem penny pinching and even a little too complicated. Give yourself some time to work through these pages, build some models and get familiar with the process. You will find that this turns into a simple routine with lots of advantages.
A quick example of this is if you didn’t get a basic cost for your salt and one day you start to brine, cure or salt crust dishes. If you ignored how you purchase your salt, you could get a shock if you have never kept an eye on the price, which brings us around too …
Your master list
If you want to keep a handle on your menu costs, then you need a master list of all your costs. Canny chefs from time immemorial have kept little black books with current food prices tucked away in their pockets. With a combination of accurate recipes for all of your menus and a full master list of costs, you are well ahead of the game. Ideally you want to be looking at a spreadsheet to do this as the next sections will be a lot more viable with one. The whole purpose of the master list is to provide you with a current single source of data on all the raw material costs you use. With this you can accurately cost your menus and keep an eye on any warning signs in the market.
The master list is a large grid with all the required data in several columns. I will assume you are going to work with a spreadsheet for now, but if not, the first column on this list could be redundant.
Column 1 - Code
Think of a basic and easy to use coding system for every ingredient you use. Keep it as simple and obvious as possible. Something like RIBEYE or ROSEMA, may be a damn sight more usable than MBSR or VHRO (Meat Beef Steak Ribeye or Vegetable Salad Rosemary). Take some time to think on how you want this to work for you. A good coding system reduces duplication and assists in searching.
Column 2 - Description
What is the ingredient, that’s all. Give it a meaningful description so that it is unique but not too specific to confuse you.
Column 3 - Unit of measure
How is it measured in buying? Think litres, pints, kilogrammes, pounds or per item. You can shop round through these units and translate them into recipe measures by experiment. You don’t buy flour by the teaspoon but you measure it that way for recipes.
Column 4 - Cost per unit purchase
How much does the whole bag or box cost if not sold loose?
Column 5 - Purchase unit
Was that flour in a 56lb or 2lb bag?
Column 6 - Cost per unit of measure
Column 4 divided by column 5
Column 7 - Supplier
Who did you buy it from?
Column 8 - Contact details
Who do you deal with and how do you get hold of them?
Column 9 - Rank
How do you rank this data if you have duplicate lines? Do you prefer a line for price or from a certain supplier or in a certain unit of purchase. The object of this is to filter out your preferred source for that combination of cost/supplier/volume for each ingredient. Your preferred source is going to be the basis for your recipe costing, all the others are back ups.
Column 10 - Date
When did you last review the cost?
Now this may look daunting as you stare around the kitchen at all the ingredients, but you only have to start the master list from current recipes and then evolve it.
Wet weight v dry weight
Here is one fatal mistake … getting the wrong weight when you are costing a dish. As you want a realistic cost or control, you need to take account of how you go from the item arriving at the kitchen door to getting onto the plate. There are many people out there who will look at a 12oz steak and cost it based on 12 parts of the 16 ounce butchers cost to you. Unless you buy these products already portioned you are going to be looking at waste and waste costs. There is also a lack of comparison between portioned prices and whole prices. Buying a whole cut of meat as opposed to a steak gives two different prices to you. This make actually average out when you look at how much it costs to produce that dish.
A 5lb beef fillet could end up yielding you 8 x8oz steaks as opposed to 10 which the butchers weight could tell you. Now you know you have a given waste or trimming cost for each fillet you buy in. Not a bad thing as it will be cheaper per pound than if you bought in the steaks ready prepared. There is good news as you can probably use some of this waste for other products or even stock.
So, at this point we have two basic sums:
1 Prepared weight is plate weight. You order in those steaks by weight at a price per pound and you have a number you can use straight off the invoice.
2 Pre-trimmed weight. You will need to develop an understanding of how many fixed portions you can get out of a known weight of raw goods. In this case you build in the waste into your costing. In the whole fillet example above we have an 80oz piece produced 8x 8oz steaks. Each steak is costing you 10oz of the rate. So you would like at what you paid per pound and multiply by 10 then divide by 8 to give you the new rate per pound.
A twist to this is when you buy something prepared but is sold at the whole rate. Fish can look very competitive when you buy them this way. You can also get filleted fish weighed rather than by the fish price. If you are going for the fish price, really trust your supplier. If they are time hungry, there is no incentive for them to do a good job in cutting the fish up for you after they have weighed it.
One of the reasons I call this thinking wet weight v dry weight is because sometimes you will sell something at plate weight that has lost a lot of moisture. If you dry age your own beef you can lose as much as 20% of the weight. Salami 10-15% weight loss. This loss is on top of what you have taken off when trimming, so it soon adds up.
The other reason is that sometimes a lot of your costs is literally wet. Frozen seafood sold by the pound will include the water glaze, as much as 50% in ice. Buy things in cans? You pay for the oil, brine or water in those too.
Cash v percentage margins
When you start looking at gross margin, we are talking about the same thing as when we looked at gross profit. While one of these numbers is a percentage and the other the overall cash benefit, they rely on each other. Basically, percentage margin is the part of the menu price that represents your direct profit. If you have a target gross profit of 100k at a 50% margin you will need to be looking at a turnover in excess of 200k. You have to get to that target by taking a number of different sized steps.
There are items on your menu that will achieve high contributions of percentage towards the target and some which will offer high cash amounts into the pot. Something like coffee, many homemade desserts and soups will offer high percentage and low cash. On the other hand some of your wine list and expensive steaks could offer up low percentage and high cash.
A table of four may look like this:
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Dish
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