1. Controlling food Costs
How to get the most of your money

2. Tips on Lowering Food Costs
Raise prices to adjust to new food costs.
Cost out menu & price items accordingly.
Control portion sizes.
Minimize & track waste.
Spot-check prep staff ensure pre-cut portions weigh what they are supposed to.
Link the chefs pay to a pre-set food cost %. Set up an incentive deal for the chef.
Set up purchase order system.
Negotiate prices with vendors for bulk buying. Take vendor discounts when offered.
Organize storage room & keep inventory to a min.
Purchase based on a budget.

3. Standardized recipes
A standard yield: expected qty. of food that results from a standard recipe. Stated in the total quantity of food the recipe produces, such as 3 gallons of clam chowder & by the number of portions it produces, such as 48–8 oz. bowls.
A standard portion: consistent qty. of product served to each person each time it is served.
Portion control tools: scoops, ladles, a standard serving bowl, or count promotes consistency and customer satisfaction, and aids in insuring a business’ profit.

4. Determining Standard Food Costs
Cost per Unit Method
Yield Test
Cooking Loss Test
Standard Recipe
Using 1 or up to all of these will help you determine your plate cost.

5. Edible Portion
Edible portion is the form in which the product is served. Little/nothing needs to be done to prepare a product in EP form.
Ex: purchasing prepared cheese, cake that needs only slicing; a case of 6 oz. chicken breasts needing only to be cooked; or a case of 24–10 oz. bottles of sparkling soda need only to be opened = ex.of EP.
Foods portion cost of a prepared item purchased in its EP form need to use the Cost/Unit Method.

6. Cost/Unit method Formula:
PURCHASE UNIT COST # OF PORTION = STANDARD PORTION COST
Example: The chef purchases a prepared cheesecake for $8.00. Using the12-slice portion, the Standard Portion Cost is calculated as follows:
Purchase Unit Cost Number of Portions Standard Portion Cost
$ / = $____
Practice Part 1

7. The Yield Test
Yield test: process of raw product purchased in “AP” form -broken down into EP & waste.
Purpose = is to determine the yield, the cost/lb, and the cost/per portion of a product purchased in an “AP” form. You break down the product into useable product & non-usable waste
Ex. Food/beverage items: A case of green beans), poultry (a turkey), seafood or meat (10 lb. beef tenderloin), canned (#10 can chopped tomatoes), bottled (14 oz. artichoke hearts), & frozen items (5 gal. ice cream) prepared prior to purchasing. Many products are not 100% usable & include some waste.

8. Yield Test
Step 1:
Step 2:
Calculate the Edible Yield %

9. Edible Cost per Portion
Step 3:
Number of Portions
Step 4:
Edible Cost per lb.
AS PURCHASED COST / EDIBLE WEIGHT = EDIBLE COST/LB.
Green Beans: $38.00 / 22 lb. = $1.73/lb.
Step 5:
Edible Cost per Portion

11. Recipe costing
By knowing the entire cost of the recipe, the business can determine the standard portion cost and adequate selling price, in order to insure that all costs in preparing the recipe are covered and profit is realized.

12. Recipe costing steps
Step 1: Fill in the required information: name of the recipe, standard yield, standard portion of ingredients including garnishes from the standard recipes. Post the AP price in the cost/unit column.
Step 2: Calculate the Individual Ingredient Cost. Ingredient qty. x price = individual ingredient cost.
Step 3: Determine Yield %: Look up in chpt.11 or book of yields if there is trim plug in edible yield % in form.

13. Recipe Costing Worksheet
Recipe: Chicken Tetrazzini
Yield: servings Serving Size: 1/24 (12" x 20" x 2" pan)
Ingredient
(1)
Amount
(2)
Purchase Unit
(3)
Cost Per
(4)
No. of Purchase Units
(5)
Cost
(6)
(A) Spaghetti
6 lb.
(lb)
$1.03 6 $
(B) Margarine
2 lb.
.89 2
1.78
(C) Celery
2 qt.
Bunch
.99
1.5
1.49
(D) Onions
1.69
2.2
3.72
(E) Flour
1 lb., 4 oz.
2.10
1.25
2.63
(F) Salt
2.5 oz.
.88
.16
.14
(G) Pepper
1 tsp
---
(H) Chicken Stock
2 gal., 2 c
----
(I) Chicken
12 lb., 8 oz.
2.35 26
61.10
(J) Mushrooms
2 c
4.95
.33
1.64
(K) Green Pepper
3 c
3.05
1.2
3.66
(L) Bread Crumbs
1.90
1.75
3.33
(M) Sharp Cheese,
shredded
5.25
2.0
10.50
Total Cost: $96.17
Abbreviations used: lb – pound; qt = quart; oz = ounce; c = cup; gal = gallon; tsp = teaspoon

14. Calculating the Cost of One Serving
See practice packet question

15. Go Big or Go Home strategy vs. 100% utilization & uncover popularity
Menu Considerations
Go Big or Go Home strategy vs.
100% utilization & uncover popularity

16. Most Expensive Offerings Worldwide
Chocopologie: by Fritz Knipschild
ABOUT THE TRUFFLED TRUFFLE: $250
Weight: 42 grams
Ingredients: dark chocolate, classic ganache and a French Perigord truffle
The ganache is made using 71% single bean Ecuadorian dark chocolate mixed with fresh cream that has been infused with vanilla pods and pure Italian truffle oil.
The ganache is then shaped around the French Perigord truffle (the truffle alone costs up to $1,000 per lb/454 g), then dipped in 71 % single bean Ecuadorian chocolate & rolled in cocoa powder.

17. Most Expensive Club Sandwich
Von Essen $225

18. Expensive Ingredient Source
La Bonnotte type of potatoes are special and hence come with high price of $560 per Kilogram. This potato is considered to have unique taste.
Limited availability: Available May 1st – May 10th only harvested by hand and would have been extinct in world I & II if not for vested people interesting in keeping it.

19. Real $ & Food pricing

21. Calculating Plate Cost
Entrée: Fresh White Fish Dinner
Costing Date: 8/03/20xx
Item
Menu Item
Cost Per Serving
Entrée
Fresh White Fish
$ 4.23
Potato
Three Choices Daily
0.37
Vegetable
Four Choices Daily
0.42
Salad
Tossed Green, Caesar, Spinach
1.12
Dressing
5 Choices Daily
Garnish
Lemon Wheels
0.02
Bread Loaf
0.27
Butter
Butter/Margarine
0.06
Condiment(s)
0.03
Total Entrée and Accompaniments Cost $6.89

22. Evaluate current profitability
When you know which menu items are the highest grossing items (meaning they result in the most profit before any other expenses are considered) then you know which items to promote.
What is the highest grossing fish on the menu?
To many operators, gross profit that matters most.
To maximize your profit, consider raising the price of the other fish entrées slightly, or simply train your serving team to upsell the highest grossing item.
Fish
Food Cost
Selling Price
Food Cost %
Gross Profit
Halibut
$2.75
$12.79
21.5%
$10.04
King Crab Legs
$7.50
$20.79
36.4%
$13.29
Salmon
$6.42
$18.99
35.6%
$11.57

23. Menu Pricing Factors Value Perception Pricing Psychology
Perception is reality
Pricing Psychology
Price endings of .99 more suited to qsr menus.
0 and 5 endings more suited for full service menus
The use of $ or -

24. Value Perception Cheap or Expensive?
vS.

25. Pricing Psychology
Quick Service
Full Service

26. Pricing Strategies Food Cost Method Base Selling Price
Contribution Margin Method

27. Food Cost Method
Ideal food cost percentage varies, typically %.
Ex: Lemon Rosemary Chicken entrée should be priced at $ Must know the cost of all ingredients in recipe from the half cup of lemon juice to the pinch of fresh rosemary.
Account for side items that come with the entrée.
$14.16 = not typical menu item price, consider lower to $13.99; if you cannot think of an inexpensive way, increase perceived value of the plate enough to raise the price from $14.16 to $14.50.

28. Calculating Base Selling Price
Step 1: Determine the selling price multiplier by dividing the budgeted food cost percentage into 100% ($1.00).
Step 2: Determine the menu item’s base selling price by multiplying the estimated food cost by the selling price multiplier.

29. How many orders to sell
A 9lb AP Beef Tenderloin is trimmed; 8 oz are lost. How many E.P. oz filet mignons can be cut from the tenderloin?
9 lbs x 16 = 144 oz
144 – 8 oz = 136 oz
136/6 oz = ea
How many servings?
22, 6 oz

30. How good is your fabrication
What is the yield % of a 22 lb turkey lost 8 lbs after fabrication and shrinkage?
EP Weight/ AP Weight x 100 = EP %
14 lbs/ 22 lbs x 100 = 63.6%

31. What are your costs per serving size order?
One loaf of bread was purchased for $ There are 20 slices of bread in the package, but the 2 end pieces cannot be used. What is the cost of the bread for an order?
Step 1: Determine loss
Step 2: Determine cost per slice
Step 3: Unit cost x serving size = cost per order
Step 1: 20 slices – 2 = 18 slices
Step 2: $2.89/18 = $.16 ea
Step 3: $.16 x 2 = $.32

32. Do per lb costs change when accounting for cooking loss
A 9 lb (E.P. means = trimmed) leg of lamb costs $4.85/lb and you want to roast it. When the roast is removed from the oven, only 2/3 of the original is left. How much does an 8 oz. serving cost?
Step 1: AP weight 9 x $4.85 = $43.65
Step 2: 2/3 = .666 x 9 lbs = 6 lbs EPQ
Step 3: $43.65 / 6 = $7.275
Step 4: $7.28 lb / 16 = $.455 oz
Step 5: $.46 oz / 8 oz = $3.68
per serving

33. Contribution Margin (Gross Profit) Method
2 versions of the formula:
Combination: #1 #2
Works for a la carte menu items as well as grouped items: soup, entrée, salad, etc.
Uses operation-wide data to determine a $ amount that must be added to each major menu item’s food cost.
Can use the same contribution margin for all items or use categories.
Practice Part 4

34. Markups affect selling prices
Different menu items are typically marked up by different amounts.
In general, the lower the menu item cost, the higher the markup (and the lower the food cost percentage).

35. Menu Engineering (Contribution Analysis)
Method of menu evaluation or analysis
Considers menu product mix
Considers contribution margin (selling price minus menu item food cost)
Considers popularity (number of items sold)

36. Menu Engineering Menu Item # Sold Pop Index % Food Cost Selling Price
Item CM
Total Cost
Total Sales
Menu CM
Strip Steak
145
23.4
$7.50
$23.65
$16.15
Ginger Shrimp
116
18.7
$5.20
$18.00
$12.80
Duck Breast 21
3.3
$7.30
$21.50
$14.20
Lamb Chops 11
1.8
$6.90
$22.00
$15.10
Pork Loin 45
7.3
$6.30
$20.50
Dark Chocolate Brownie 50
8.2
$3.80
$16.50
$12.70
Peanut Butter Parfait
120
19.4
$6.35
$20.85
$14.50
Pear Foie Gras Crisp for 2
111
17.9
$7.75
$24.75
$17.00
619
100%
Average
77.38
12.5%

37. Low or High Profitability
Menu Item
Pop Category
CM Category
Menu Item Class
Strip Steak
Ginger Shrimp
Duck Breast
Lamb Chops
Pork Loin
Dark Choc. Brownie
Peanut Butter Parfait
Pear, Foie Gras Crisp for 2

38. Categorize Performance
High
H/L
H/H
Popularity
L/L
L/H
Low
High
Contribution Margin

39. Pre-fix menu Types 2. Prix fixe and a la carte 3. Prix fixe lunches
1. All fixed price, all the time
2. Prix fixe and a la carte
3. Prix fixe lunches
4. Prix fixe specials
5. Restaurant weeks

40. Pre-Fix all the time High reputation chefs/destination restaurants.
Much clearer forecast of the price per head.
Diner already knows he or she will lay down a significant amount of money before the night's end.
Examples: Chicago's Alinea, Yountville, California's The French Laundry, and New York's Eleven Madison Park all serve exclusively fixed-price menus.
Clientele are essentially seeking out the skill of a chef and the experience of a restaurant, rather than individual dishes
Chef retains control of food and likely to outlay on ingredients and labor.
When you're paying $295 per head at Thomas Keller's Per Se, you're putting aside that sum for a culinary experience.
Whereas when you're paying $28 for a single plate of hearts of palm in Per Se's a la carte "salon room," you lose the context of that fine dining arc—and potentially start questioning whether that individual dish is worth what you're paying.

41. Prix fixe and a la carte
New York's Gramercy Tavern and Cambridge, Mass.'s Craigie on Main come to mind; of course, any number of other fine restaurants, like Chicago's Blackbird, offer a fixed-price tasting menu in addition to the a la carte options.
This approach may ease the fears of diners who don't want to shell out for a set-price menu
Some may feel more comfortable with a $15 appetizer, $29 entree, and $11 dessert than a $50 prix fixe menu—an expensive-looking number, even if it's the better deal.
Ensure that you put sufficient thought into each side of the menu; even if you're counting on more people opting for one choice than another, there's no easier way to alienate potential repeat customers than to make them feel as if they made the "wrong" choice.
If there's any sort of tasting menu offered, ensure that you're able to deliver a suitably impressive performance.

42. Prix fixe lunches
Ramp up lunch business that may otherwise be hard to pull customers into the door.
Jean Georges, Del Posto and many other highly esteemed New York restaurants offer lunch menus at less than a third the cost of their dinner service (the former, two courses for $32; the latter, three for $29; both include bread, amuses and after-dessert treats).
Less extravagant end, the fine Greek restaurant Kefi does a $9.95 soup & half-sandwich combo,
An absolute steal for a sit-down restaurant; and Gramercy Tavern does the same deal for $14, an even steeper discount given the caliber of their cooking.
If you're keeping the space open, with all the operating and labor costs that it entails, it's a possible way to make your lunch business stand out.

43. Prix fixe specials
Valentine's Day, New Years' Eve, Thanksgiving—many restaurants to switch to a fixed-price menu
Both so that the kitchen can better manage and plan for the number of customers
Guaranteed to extract a certain amount of revenue from the tables you're turning (rather than having a spot taken up by a low spender or light eater, when you could make more off that seat).
Special menus often gain a good deal of attention— whether it's an ingredient- or animal-focused special.
Example: "Come get 4 courses of Mangalista pig, Sundays only!", a seasonal tasting ("Our summer vegetable menu will run from July 13-17"), or a thematic offering "In honor of Cinco de Mayo, we're running a 3-course Mexican-themed menu all week".

44. Restaurant weeks
Cities and towns all have started periodic "restaurant weeks" & restaurants offer special prix fixe menus.
For the diner, it's a way to experience restaurants that might otherwise seem out of their price range.
For restaurants, it's a way to gain exposure and encourage advance reservations.
It may seem tempting to coast during these promotions, serving simpler, lower-cost plates to lock in as much of a profit as possible
Not just used to fill seats—it's to show off your restaurant to potential repeat customers.
Cutting corners may get a few more dollars, but the real benefit is finding new patrons who'll come back.

45. Changing Menu Prices
If food prices are rising rapidly customers may recognize the need of the operation to raise prices.
In periods of stable prices where other factors may dictate increases customers may not be as willing to accept price increases.
Sometimes menu items are removed and then brought back in anew manner with a higher price.
It’s not wise to raise all prices at once.
Market Price.
Daily inserts for items that have costs that fluctuate.