chefz.net

Those of us who receive every month a P&L on their desk and start analyzing the last months results in order to prepare for the next P&L meeting to justify “their numbers” have heard this line all too often. As do I; as a matter of fact I do on a quite regular basis I hear that the food cost was to high compared to budget. I mentioned earlier that I grew up in a family of restaurateurs as well as scientist and mathematicians. That should give me enough knowledge to cost our menus and keep the costs in balance. So why does it happen that sometimes our results look so bad?
To answer my own question: Is a high food cost really so bad? Or can a high food cost actually improve a bottom line? To be quite honest it could. To easier visualize the problem I suggest three simple main courses that we can find on any given menu. A chicken dish, a fish dish and a meat dish. The chicken sells for $25, the fish for $30 and the steak for $40. Now as a good restaurateur or chef we priced out our menus and know that the food cost for the chicken dish is 20%, for the 30% and for the meat 40%. Intuition will let us tell our service to push the chicken dish, as it has the lowest food cost. Yet I insist on pushing the steak, despite the high food cost, which is double of the chicken dish. I know that I earn a lot of questioning looks, including those from our accounting department. Yet I have a very good reason to push for the item that has the highest food cost. It is contribution margin I am after. Our goal is to deliver to be bottom line. We can assume that the labor needed for each of the dishes is quite similar and even if they may differ by +/- 25% in the end we still have he cook to come in to work. For this exercise we assume that our total labor for the chicken dish is $2, and $3 for each the fish and meat course.

As we can see in the table, despite the meat course being the highest in food cost it is still the most profitable. As our GM likes to put it, we bank dollars not percentages. While $4 difference my sound not that much; selling just a thousand meat dishes in a month will give us an additional $4000 in profit. Now who does not like that? Back to our P&L that shows us a high food cost versus the budget/forecast we can see that also the GOP is higher than budget/forecast, and I find myself explaining the same scenario over and over with our finance department. I know that is an uphill battle and I often get the answer:” But if you could have just kept the food-cost one percent lower…” I usually answer with “… then our profit would be a couple thousand dollar less”.
Now that I made my point that a high food cost is not a bad thing per se, I need to add a few more things:
1. the recipes have to be properly priced out and be updated on a regular basis
2. the contribution margin has to be updated to ensure we know which items have the highest contribution margins
3. the proper controls to prevent loss, waste and rotation have to be in place
4. this “contribution margin model” can not be an excuse for a high food cost if the GOP is not increased as well. If the food cost is rising and the GOP does not increase as well there are some other fundamental issues (see point 2)

In our excursion into sorbet making we used a sorbet stabilizer we purchased from on of our purveyors. And even the resulting sorbet was ecellent new questions are arising. What is sorbet stabilizer? Reading the ingredients on the container we learn the stabilizer is made up of:

Now that we know what the ingredients are, we realize the we have all of the above on our shelf, we use on a more or less regular basis. That leads us to two more questions. How is the stablizer formulated now that we know the ingredients? and. Should we make our own stabilizer mix rather buying it and relying that the vendor does not change the formulation or discontinue the product?

While consulting “Fozen Desserts” by Migoya and google we realized the Michael Laiskonis posted an entry about the math in sorbets in his workbook.