Stop Obsessing Over Low Food Costs – Chase the Fat Gross Profits Instead

Long ago, I learned about restaurant cost controls. When it came to food cost, I learned it must be 30% or less. Today, it’s a challenge more than ever. Point being, the focus was always on the percentage. It took me a while to understand; we bank dollars not percentages. Here’s an example. Let’s say you have a chicken dish on the menu for $28, and it cost $7.84 to plate. That’s a 28% food cost, with a gross profit of $20.16. Now let’s say you have a steak on the menu for $65, and it cost $24.70 to plate. That’s a 38% food cost, with a gross profit of $40.30. So, even though the steak has a much higher food cost, you made double the amount of money. So, if you had a choice, would you rather brag about how low your food cost is? or would you rather make money? That money will pay your bills… and maybe you’ll have some left over. Wouldn’t that be nice? I’m often shocked to hear industry veterans that don’t understand this concept. When it comes to “menu engineering”, people love to mention the classic diagram that was first created in the 1980’s. It helps compare popularity and profitability for each of your menu items, and categorizes them as stars, puzzles, plow horses and dogs. What many don’t realize is – it’s based on dollars not percentages. The “star” on your menu would be your best-selling steak, that brings in lots of revenue, with lots of gross profit. So, stop celebrating low food cost. Gross profit pays the bills.