Cost and profit is a balancing act in any restaurant. You need to keep enough of the right types of ingredients on hand to meet patron expectations; yet, you want to avoid surefire profit-busters of small batch ordering, too many specialty ingredients, or food waste. Granted, you absorb a certain percentage in order to provide patrons with unforgettable dining experiences, but how do you determine how much to order to prevent costs from eroding profits?
Outlining ingredients costs and ordering needs is imperative. If done consistently at about the same time every week, this focused tracking provides you with a realistic snapshot of:
- Ingredients inventory and expenses
- Potential cost control issues
- Appropriate pizza pricing
Further, this valuable information helps you calculate accurate projections.
Failing to align ingredients cost and ordering projections with your needs can easily upend profitability. Implementing a few best practices will curtail missteps:
Spoiled food is wasted money. Period. To double check and further refine projected numbers, do a quick estimate on an evening’s worth of table turns. For example, if your restaurant seats 100, and you’re open 6 hours, you could realistically turn each table 3 times – meaning you’ll serve 300 guests at capacity. But, you won’t hit capacity every night. Determine your busiest days and most popular pies, and adjust your ingredients orders to accommodate.
One way to approach this is to determine 'par' quantities for each day of the week by using your historical POS data. Then you can not only order the right amount of ingredients, you'll also have a good idea how much dough, or how many crusts, you'll need to prep as well. (Bonus tip! A good estimate is to prep your average amount of dough needed for the day, plus 10% to account for unanticipated traffic.)
Request supplier quotes
Getting a few detailed quotes from suppliers not only gives you options, it reassures you that you’re getting the best deal. For example, take a critical look at volumes. Does one vendor offer a lower purchase threshold for bigger discounts? Something that simple, and seemingly inconsequential, could be the difference between good and great profitability. As a rule of thumb, get quotes from several distributors per year, so you know what quotes are on-target or out-of-line.
Compare actual versus ideal food costs
Actual food cost is just that — the amount of money you pay for ingredients. Ideal food cost is the amount of money the ingredients you sold should have cost. While both should match, the reality is that they won’t because you can’t measure every piece of food or account for all waste. Where the comparison comes in handy is in spotting a potential problem. If both actual and ideal costs don’t rise together, that could indicate underlying issues like theft, inadequate staff training or measurement and portion issues. However, if they do rise in tandem — that’s good news because your sales mix includes high food cost items that drive greater profitability and your projections are on course.
Check ingredient costs against total sales to understand if — and how much — profit is being made. Also make sure you take regular inventory. A best practice is to do so weekly for major supplies like dough/crust, pepperoni, and cheese, and a monthly inventory of all your ingredients and supplies. Even though it's cumbersome, this is crucial to keeping your ingredient costs and overall profits on track.
The new Alive & Kickin’ Pizza Ingredients & Cost Calculator simplifies weekly recordkeeping as it pertains to ingredients ordering and costs. Available in an interactive Excel worksheet or a PDF for manual computation, this valuable tool that helps balance cost and profit is yours to download for free! Just click the button below.