COGS / Food Costs

I recently attended a seminar on menu analysis, and a discussion ensued regarding food costs. I was surprised to learn that not one person in attendance (of approximately 40 restaurateurs) used a software program to manage their food costs, and thus, to figure out the costs of their menu items.

Here’s another way to look at it: Imagine that you are about to purchase a new television.

You’d research the quality of each brand, settle on a make (LCD? HD? Plasma?), and then shop around for prices. Best Buy. Costco. Sears. The independently-owned local store (shout out to Better Ideas Audio & Video in Bend, Oregon, where we bought our big-screen from).

Whereas you might not price compare your everyday items such as a roll of duct tape or batteries, you certainly price compare large ticket items such as the before mentioned big-screen television, or a vehicle, furniture, musical instrument or jewelry. Although, some people price compare gas stations just to save a couple of cents, but that’s another topic all together.

With this in mind….

You’ll recall how upset I was with our previous food rep who told us that we couldn’t have online access to food prices. After finding out that we were able to, we ended up saving thousands of dollars on our food costs. Here’s how.

When we’re doing a food order, we have instant access to price compare between the two main companies that we use. We open both programs, and do a side-by-side comparison.

We never, ever change our staples such as our flour (All Trumps High-Gluten) or our cheeses (Grande whole-milk mozzarella, Tillamook Cheddar)…

…but we have no problem switching the brand of jalapenos, romaine lettuce, roma tomatoes, etc. These items are inter-changable and have no difference in taste; only in price.

For example, we use a smoked salmon on our Alaskan pizza. This is a spendy item, so let’s price-compare the two companies:

The company listed above is offering 1.5 pounds for $18.54.

Their competitor, however, is offering 2.5 pounds for $10.75.

I’ll get an entire pound more of smoked salmon for $7.79 less. Not only that, but it gives me an opportunity to have a Smoked Salmon Salad for a lunch special because I have more on hand than usual. It’s a win-win for both the restaurant and the customer!

The recipe manager software is even more amazing. I enter all of the ingredients (and amounts used) for each menu item, and am able to know TO THE PENNY how much that particular menu item costs me. This is done in real time, so even when the price of the ingredients fluctuate, I can click a button on my laptop to reconfigure the actual food costs.

This helps me to know which pizzas to put on special, or to make for the slice-of-the-day. If bacon and cheddar are expensive that week, I certainly am not going to put our Bacon Cheeseburger pizza as the special. Whereas if smoked salmon and asparagus are a lower cost for me, I’ll push the Alaskan pie moreso than usual.

It’s almost a science.

Lyle has a great write-up on his blog about food costs and purchasing for Jake’s Diner in Bend (if you’re really that interested in the back-of-the-house stuff that goes on at restaurants).

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This entry was posted in All About Us, baker city, Food, Our Pizzeria, Restaurants. Bookmark the permalink.

2 Responses to COGS / Food Costs

  1. Tom says:

    Having spent two summers in my college years processing salmon I am making an educated guess your competitors are offering two different species of smoked salmon. The first says “silver coho” which is more expensive than other species. The second I am guessing is made from either “pink” or some farm raised species. There is a big difference in taste between the species, with Chinook “king” salmon at the top. (The king of fish, and the fish of kings).

    Of course, by the time you smoke salmon and put it on top of a pizza or salad with other strong tasting ingredients, most people wouldn’t know any difference. My $0.02

  2. Zac says:

    That is exactly why you guys are doing well while others are failing…
    Keep a box of the pints for me? 😉

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