In the hospitality industry food cost control is very important since it requires intense budgeting, the process can limit waste.
The general rule of thumb in the Food & Beverage industry is to keep food cost percentages between 28-32%.
If done properly and when attention to detail is paid, food cost control eventually results into higher profitability of any restaurant or the F&B Department of any hotel.
The method and application of food costing and control in the industry is achieved through placing accurate budget techniques in the organization. This can be done by identifying and taking the price of each item or product used during production and also taking into account all the perishable goods and products in the property.
In my experience, I have witnessed General Managers, F&B Managers, Accountants, Kitchen Supervisors, Purchase Managers, Store Managers and even Chefs supervise the inflows and outflows of food items in a property, however many completely overlook the budgeting element.
Food costing can be said to be the all time function of a property including regular and ad-hoc function operations.
There are plenty of methods used by different organizations in regards to Food Cost Control, mainly:
1. Applying the right kind of Inventory Control System
Many hotels and restaurants use the First In First Out Method (FIFO) while managing their stock since it is the most cost effective way to prevent wastage.
2. Knowledge of Current and Future In-House Guests
It is important to note that forecasts play a huge role in reducing costs, and therefore; for a hotel – coordinating with the Front Office/Reservations department in obtaining the number of current and future in house guests will be of great help.
3. Portion Control
Additionally, In the hospitality F&B Department, different portion control methods are involved and it affects the property’s profits positively, when it is well applied or done through weighing of items and making sure that each plate that leaves the kitchen has the exact same amount of items on them an knowing that any extra has to be charged accordingly, the operations will be streamlined.
4.Department Profitability and Variance Analysis
It is very important to prepare Monthly Food Cost reports, these should be complementary to the Profit and Loss Report (Income Statement) with a detailed breakdown of the revenue and the Cost of Sales. The greatest advantage of this method will enable the property to know the Gross Operating Profit Such a report will assist in doing a variance analysis monthly which will make it easy for the property’s management to determine the performance, progress and also serve as a motivation to set future profitability targets.
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As a seasoned professional in the hospitality industry with extensive experience in food cost control, I have been actively involved in implementing and overseeing various strategies to optimize profitability for restaurants and F&B departments in hotels. Over the course of my career, I have collaborated with General Managers, F&B Managers, Accountants, Kitchen Supervisors, Purchase Managers, Store Managers, and Chefs, gaining valuable insights into the intricacies of food cost management.
One critical aspect I've observed is the significance of accurate budgeting in food cost control. Many industry professionals, although adept at supervising the inflows and outflows of food items, often overlook the crucial element of budgeting. This negligence can be a major barrier to achieving higher profitability.
In the provided article, the author rightly emphasizes the importance of keeping food cost percentages between 28-32%, which is a widely accepted rule of thumb in the Food & Beverage industry. Achieving this balance requires meticulous attention to detail and the implementation of effective food costing and control techniques. Here are some key concepts mentioned in the article:
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Accurate Budgeting Techniques: Successful food cost control involves placing accurate budgeting techniques within the organization. This includes identifying and recording the price of each item or product used during production, as well as accounting for perishable goods and products in the property.
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Inventory Control System – FIFO Method: Many organizations employ the First In First Out (FIFO) method for managing their stock. This method is deemed the most cost-effective way to prevent wastage and ensure efficient inventory management.
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Knowledge of Current and Future In-House Guests: Forecasting plays a crucial role in reducing costs. Coordination with the Front Office/Reservations department to obtain information on the number of current and future in-house guests is essential for effective planning.
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Portion Control: Different portion control methods are implemented in the hospitality F&B Department. This includes weighing items to ensure each plate leaving the kitchen has the exact same amount of items, and any extra is charged accordingly. Proper portion control positively impacts the property's profits.
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Department Profitability and Variance Analysis: Monthly Food Cost reports, complementing the Profit and Loss Report (Income Statement), provide a detailed breakdown of revenue and the Cost of Sales. Conducting a variance analysis monthly aids management in assessing performance, progress, and setting future profitability targets.
For those seeking to optimize profits in the F&B business, the article suggests consulting for effective decision-making, ranging from pricing strategies to finding new suppliers. This proactive approach aligns with my own experiences in identifying innovative solutions for improving the bottom line in the dynamic and competitive hospitality industry. If you are looking to enhance your F&B business's profitability, feel free to get in touch for a free brief consulting session.
