Give Your Menu a 5-Minute Health Check

5 minutes and a cup of coffee

Here's a fun fact for you: anytime a reputable hospitality consultant interacts with a new client, they're able to identify most of the main issues within the time it takes to drink a cup of coffee (or tea).

That's it! That's all it takes.

How is that possible? What sort of extensive schooling or advanced technical insight allow them to discover the issues so quickly? You've been staring at the numbers for weeks and are struggling to figure out why the food cost is going up.

From a high-level perspective, it's remarkably simple. I'll show you how!

Step 1 - Review the last 30 days of food purchases

Many times, this is presented as a stack of invoices from various different suppliers and distributors. Your consultant will quickly jot down the names of each supplier in an Excel or Google Sheets table, and then start plotting invoice values and dates into their respective columns, totalling the amounts.

If you're a current DigiChef subscriber, we take care of this for you automatically! If you're comfortable with Excel, you can do this with a simple table like the one below:

Invoice Date	Sysco	GFS	Islands West	Snowcap
July 1	$2,258.28		$352.93
July 2		$1,712.55	$155.86	$510.01
July 3	$2,981.77
---	---	---	---	---
Totals:	$5,240.05	$1,712.55	$508.79	$510.01

It's important to not only get the total amounts, but also the date of the purchases. This helps to visualize the overall trend or direction of your purchasing efforts, for example: is the food cost on track to increase or decrease?

Step 2 - Review the last 30 days of food sales

This is best done with a detailed Sales Mix Analysis that most Point of Sale platforms can easily generate. These reports can often be exported as either a PDF or CSV type file.

A CSV is a 'Comma-Separated Value' file, which is a very simple, universal type of spreadsheet stored as a text file. Each column of the sheet is separated be a comma, indicating where each column ends, and the next begins.

If you've never worked with a Sales Mix Analysis document before, it's a consolidated look at the total sales volumes for each menu (or beverage) item, broken down by number of units, and total fiscal earnings.

E.g.:

Menu Item	Quantity Sold	Value ($)
Garden greens	174	$ 2,610
Cobb salad	114	$ 1,824
---	---	---
Salad Totals:	288	$ 4,434
---	---	---
Burger - Chicken	375	$6,750
Burger - Beef	512	$9,216
---	---	---
Burger Totals:	887	$15,966
---	---	---
Total Sales:		$20,400

Step 3 - Get the current Raw Food Cost percentage

Your Raw Food Cost (RFC) percentage can also be interpreted as the amount, per dollar of food revenues, that is spent on actually creating the dish itself.

RFC Percentage = (Food Purchases / Food Sales x 100)

If we use our purchase totals from Step 1 ($7,971.40) and our sales totals from Step 2 ($20,400) in the formula above, we end up with the following RFC percentage: 39.08%

39.08% = (7,971.40 / 20,400 * 100)

So what should your Raw Food Cost ideally be?

The answer actually varies based on your service type, and your main revenue drivers. If your ratio of alcohol to food sales is 60 / 40, it's okay to run a slightly higher food cost, in the 34% - 36% range. You're going to make up the the slight loss in profit margin with amazing profit margins on your beverage sales!

If your ratio of alcohol to food sales is 50 / 50 or less, you ideally would like to return an ending food cost of 29% to 33%.

Given that information, we can see that our Raw Food Cost of 39.08% is high!

Step 4 - Menu engineering & systems review

Given that we know our RFC is high, and we know that's just the total food purchases divided by the total food sales, what can we do to figure out the why behind it?

It's easy! We can surmise that our issue will stem from one or all of the following things:

1. Improper menu engineering
   • The most likely culprit
   • Looking at our Sales Mix Analysis, we want to focus our attention on the highest volume items. Which items are we selling the most of?
   • Make sure those high volume menu items have recently costed recipes and that you're charging a proper amount on your menu! Ingredients change price every single day! (DigiChef subscribers see these on their invoice emails!)
   • If the bulk of your sales are made up of items that exceed your target RFC, it doesn't matter how great the rest of the menu is costed. You'll never be able to achieve target costs!
2. Lack of portion controls
   • The second most likely culprit, and definite partner in crime
   • Is your kitchen currently using a portion guide? Do all of the cooks know how much that portion of roast beef is supposed to weigh? Are we weighing high-cost items like the shredded cheese?
   • How often do you spot-check these weights? Grab 5 of the same portioned item and weigh them out - are they all within spec range?
3. Food Waste
   • Are you currently tracking the food waste? If you're not, you should be! Review these sheets to spot trends. E.g.,
     • Are we constantly throwing out produce?
       • Update your ordering par levels.
     • Do we consistently overcook the poultry?
       • Time for a meat cooking training session.
   • Does your kitchen get free staff meals? If so, are they recording them somewhere?
   • Who makes the staff meals? Are they making "creations" that consume 2 or more protein or high-value items?

No hidden secrets

If your RFC is high, it's practically guaranteed to be one of the 3 items mentioned above. That's why it's so easy for a consultant to come in and identify the issues - they're the same everywhere you go! The problems you are encountering are not specific to you. Everyone who's been involved in the hospitality industry has faced these same challenges!

By following the troubleshooting steps listed above you can expect to start lowering your food costs again. Get into the rhythm of recording your purchasing in something as simple as a table, periodically reviewing your sales mix and keeping your high-volume recipe costs up to date.

Do it enough times, and you'll soon find yourself finishing a review over a cup of coffee (or tea).