Yeah, the food part of owning a restaurant is important. It may or may not be the most important thing, but it’s up there.

There are the actual food choices, menu mix, that’s an important element. While it’s important not to be all things to all people, and offer food from every genre and nationality, it’s equally important to have a smart selection. This will help you not to ostracize too many diners and allow your restaurant to stay an option for people looking for a place to eat that can please their entire party. The exception to this would be a very niche specialized establishment such as a quick-serve restaurant serving Grilled Cheese Sandwiches. If that’s your “thing” then be the best at it and do just that. But generally, in sit down casual to fine dining establishments, the menu mix needs to suit a slightly larger audience yet still be cohesive.

One strong piece of advice that we always give our current and potential restaurant clients is to “stay in your lane”. Spend some time developing a menu that has meaning to you, be in love (or at least in like) with the dishes and think about variety enough so that a meat-lover can bring his new vegan girlfriend to your place without hesitation.

Renown Chef/Owner of The Quarry Restaurant in Hingham, Massachusetts, Greg Jordan, also adds…

When planning the menu, I always like to consider current food trends, as well as consider the target audience. Consider the local tastes and preferences as well. You also want to develop dishes that are allergy aware and convey that info easily and clearly to the guest, so they feel comfortable ordering their special meal from you. Don’t forget kids…if you can keep them happy, you have a much higher chance of keeping the parents coming back. Dessert, coffee & n/a (nonalcoholic) beverages are also great profit boosters.” 

There should be a cohesiveness to your menu and even cross-utilizing some ingredients is ok (especially food cost-wise) but you don’t want to necessarily highlight that (you could look cheap or unoriginal) but the goal is a theme or story that your menu could play out for your guest.

In addition, Chef Jordan adds, “buy a whole chicken and serve the roasted breast as an entree. Cook the thighs and serve as a taco app etc. Definitely no shame in cross-utilization.”

Once you’ve written out and visibly reviewed your menu, and it hits on all the points stated above, now it’s time for recipes and costing.

The recipes are to ensure portioning and consistency. Each dish on your menu, each and every dish from the side dishes to the desserts, should look, smell and taste the same 24/7 no matter who orders it when. This can only be ensured by proper training and an extremely important piece to that training are recipes and pictures. (Videos would work great for training as well).

The popular food blog by “Toast” recently posted an article about food cost authored by Ed Heskett. In this article, Mr. Heskett refers to “Re-Engineering Your Menu”. He states, Take a long look at your menu and learn to use the basics of menu engineering to eliminate the menu items that are costly to prepare and unpopular. These are the items that are sending your food cost way up without bringing in any extra profit. Then, figure out which items are most profitable and find a way to upsell them.”

And finally, there is the actual costing…

No matter how good a dish looks, smells or tastes, if it doesn’t make you money – it’s costing you money.

We were recently working with a catering client who creates and delivers meals and sells them by the week. There was one-week last month where she thought she really just knocked it out of the park. And she did as far as her clients were concerned. The menu was outstanding, so robust and just “wow” that her clients could not stop commenting about how that was the best week yet and wanted more.

Our client was thrilled with this feedback and started to feel like she finally “made it”. The problem was that once we produced the numbers for that week, the food cost on that menu was 50%! That’s 20% more than it should be! As a matter of fact, that week of delivery meals cost my client over $1000. That’s literally money out of her personal pocket to pay for that week’s meals. We can call it a “marketing expense” since it certainly got a lot of attention and helped to solidify her client’s loyalty, but a loss is a loss and you can’t operate a business that way if you want to stay in business.

Now, we know that not all dishes can be created equal. Some dishes might inherently come with a heavy 40%-50% food cost but those are offset by dishes that sell equally, or better, and are costed at maybe 10% to 20%. For example, the main entree at a steakhouse might be costed out at 50%… a prime filet mignon might cost $20 and the steakhouse really can’t get away with charging much more than $40 for just the filet so that’s a 50% food cost. But steakhouse menus are often a la carte meaning sides cost extra. Therefore, a side of let’s say steamed broccoli might cost $1 to produce but can hold a menu price of $6 – that’s a 16% food cost. As a matter of fact, most side dishes come in somewhere between 10% and 20% which can help offset a few higher cost menu items.

Need help figuring out your food cost? Try this cool tool by Toast…

In summary, here are the action steps to creating a menu that works.

  1. Create and design a menu that makes sense. That tells a story or has a theme. Don’t be all things to all people. Keep in mind that there are certain types of food that a portion of the population are allergic to, or just do not like, and have enough variety to please the majority – but maybe not everybody.
  2. Create recipes and training cards with photos and/or training videos that ensure consistency in every one of your dishes at all times.
  3. Cost out every single recipe right down to the salt and pepper. THIS IS EXTREMELY IMPORTANT. Your entire menu should be costed out and then create mock orders and calculate what the average food cost per diner would be. If you offer bread and butter/oil service, figure out what each serving costs and add that to every appetizer and main meal cost. When you are done with this exercise, you should have a strong idea of what your overall food cost should be and CLOSELY watch your weekly and monthly financials to ensure that your actual food cost is matching your estimated food cost from this exercise. One great way to keep an eye on costs quickly and efficiently is having a separate bank account dedicated to COGS. For example, if you know that your COGS should come in at 30%, then allocate 30% of every deposit to a COGS checking account. And then use that checking account to pay your COGS vendors. If there isn’t enough money in that account to pay your COGS vendors – you’ll know right away and can start looking for the leaks and adding higher profit margin specials… or initiate a server contest on who can sell the most sides (or other items that have high-profit margins).
  4. If it is coming in on target, then great! Work on beating it with some fabulous specials that can help knock off some food cost points which will then turn into profit$! If your food cost is coming in higher, then you’ll need to exam each dish, check your inventory for theft or waste, check your vendor prices for any price increases, evaluate your menu mix, and make some changes as quickly as possible in order to stop losing money. This is why it is critical to know your food cost at all times, weekly, or at a minimum monthly. After all, if money starts flying out the window, wouldn’t you want to close that window as fast as you can?

About the Author

A former restaurateur turned bookkeeper turned Profit First Consultant, Author Kasey Anton is on a mission to help eradicate restaurateurial poverty. She and her amazing Team at Spark Business Consulting have been helping restaurants get started, get organized, and get profitable for the past 10 years and counting.

Favorite Quote? “People don’t care how much you know until they know how much you care. “ – Teddy Roosevelt