Every operator I talk to right now is feeling the pain of supply chain disruptions and high food costs. Inflation was the straw that broke the camel’s back for many in the restaurant industry, especially after the pain of coping with weak sales at the start of the pandemic.
Only 25% of operators think their restaurant will be more profitable this year than last, largely because 90% also say their food costs are higher now than before the pandemic. Of course, high labor costs also play a big role in restaurant profitability, so operators are after every penny they can find.
While restaurants have always been intentional when it comes to food waste, menu offerings, and purchases, I see operators stepping up their efforts to seek out any efficiencies to help save money right now. This is necessary but can be so detailed and time consuming that it gets pushed to the back burner. Menu engineering, especially for corporate restaurant brands, must take into account a myriad of details, from vendor pricing in different regions to regional menu item preferences to the rapidly changing costs of food. However, menu engineering doesn’t have to be a task you dread. You can use modern restaurant technology to ease the menu engineering process, gain better visibility into your profit and waste, improve employee training, and track your efforts.
1. Leverage technology to make menu engineering easier
It’s a challenge to keep up with and adapt to the frequent changes in commodity prices right now, which makes changing your menu even more difficult than it normally would be. Trying to calculate in spreadsheets is doable for a shorter menu or a single location, but those calculations start to get more difficult when you’re looking for vendors in different regions or menus serving customers in multiple states.
Leveraging up-to-date catering technology allows operators to instantly pull costs from the newest vendors when playing with various theoretical recipes. With a recipe costing tool, operators can easily substitute ingredients, change ingredient quantities, or review paper costs from a notional perspective.
This allows restaurateurs to see how various changes will affect profitability, without complex calculations, as well as to see in different locations or regions that different supplier prices will affect profitability.
2. Get real visibility into your food costs
Restaurant owners are moving from basic food cost calculations to more complex reporting, such as actual costs versus theoretical food costs (AvT). By creating dashboards that allow you to see an up-to-date P&L at a glance, as well as reports to compare item profitability across locations and region, operators have the information they need to take data-driven decisions.
Also, looking at the difference between what costs should be and what they were provides insight into other places where food cost can be mismanaged. This could include inconsistent servings, kitchen waste, and employee theft. Reporting on your profitability and tight cost control of your recipes allow you to quickly detect problems in other areas as well.
3. Strengthen employee training
Whatever the source of your inflated food costs, having more control over your menu allows you to reinforce training in the most effective way. If you see that a high-margin item has lower sales, you can implement LTOs and have employees push sales. If employees are overstaffed, a quick micro-learning module is a great way to get your margins back to where they should be. Or you can reduce waste by discovering that they are preparing too much or too soon and creating better preparation schedules for employees to follow.
Strong menu management enables improvement in all areas of your inventory and food management. What seems like a tool to improve profitability through menu engineering can have a positive domino effect on the rest of your organization, seeing and reducing waste, theft, and portion consistency.
Controlling expenses and maximizing profits are endless for restaurateurs. But with margins tighter than ever, it’s critical to look at every area for improvement. Using digital solutions to gain critical insight into food costs, price fluctuations, and other variables allows for real-time insights and to act proactively rather than reactively as you seek to maximize the profitability of your restaurant.