The short answer is no.
Of course we need to keep an eye on our food cost and of course we need to know what our dishes cost (more on this later) but only looking at the food cost or beverage cost as a percentage doesn't help us. For instance in large companies is very common to set the food cost at around 25% and this will most likely be a Key Performance Indicator for the Executive Chef and the one thing he will receive the most grief for.
This is especially true when we look at individual dishes, rather than the whole menu. For instance you may have a dish with Lobster or and expensive cut of beef and selling it at 4x cost (plus 20% VAT) may just make it too expensive or not competitive. Say for instance this dish cost you £5 per portion, you should sell it at £24 (£5x4cost +20% VAT)but as this would be too much you decide to sell it for £19.95 or £16.63 + VAT, which is 30% food cost (£5/£16.63 x 100).
Now take a normal dish, say a pasta, which costs you £2.00 per portion and you resell at £2.00 x 4 +VAT = £9.60.
PASTA DISH GROSS PROFIT: £6.00
LOBSTER DISH GROSS PROFIT: £11.63
Now let's pretend these are both pasta dishes, one with Bolognese and one with lobster. Your customers will only have one pasta dish per meal. Which one would you rather sell? You can play with the figures but the idea stays the same, sometimes we need to look at absolute profit rather than food cost as a percentage.
On a little side note, I think it's very important to maintain some sort of minimum price for all our dishes in a certain category. For instance your pasta category. If you have a pasta with tomato sauce on the menu you don't want to just look at the food cost to set up your price as the price (and the gross profit) may be too low and if you end up selling loads of this dish, yes you will have a very low food cost at the end of the month, but your bank balance will be very low too!
Too many times we think that all that could be invented as already been invented, but time and time again we are proved wrong by the latest innovations. The vacuum cleaner had been around for more than 50 years when Dyson decided it was not happy with it's vacuum cleaner suction and he would then create one without a dust bag! On the other hand we don't always have to come up with earth shuttering new ideas to be innovative in our market, we can just copy someone else's idea and maybe put our twist on it to make it a little more personal. This is especially true if you are based in a smaller town where trends don't move as rapidly as in bigger cities, your competition is slower to react - or sometimes just doesn't care at all - and customers may have not heard of the latest trend yet or maybe just didn't have a chance to try a particular new dish.
Innovation keeps our menus fresh and our customers interested. The latter is especially true when your customer base is not particularly price sensitive and one way to get that extra order is to come up with specials that are "Instagrammable" and sound delicious. Innovation of course is very helpful to accumulate more followers on social media too.
In my case my restaurant is based in a small town, about 50 miles from London. A lot of people will commute to London for work but they will spend their weekends at home and eat locally. A great example of this is when I was watching "Gordon, Gino and Fred: Road Trip" and Gordon Ramsey went to this old pizzeria in Naples and asked to cook a sweet pizza. He put on it: Lemon Curd, creme fraiche and basil. My first thought was "how can we put an Italian twist on it? Why not use mascarpone cheese instead of creme fraiche?" This can work for many other dishes, you just have to ask yourself "how can I put a twist on it?"
Books like "The Flavor Bible" can help you work out what ingredients go well together and find some unexpected and surprising combos.
Nowadays is very easy to keep your hand on the pulse just by looking at Instagram, following hashtags that a relevant to you and your sector or type if cuisine, following accounts that feature a lot of creative ideas. Also let's not forget to go out, travel, discover and experience ourselves.
So install a note taking app on your phone or jot down your ideas. Set a time aside to experiment or make time before or after the service - or during if quiet. Don't be afraid to try, to tweak and try again.
1. Reduce your menu
Wastage is like an invisible disease: it's hard to see and quantify and sometimes it does irreparable damage. This is especially true for restaurants that have a large menu, but don't have a large number of customers. A few days ago I was reading a comment on a Facebook page for pizzaioli/pizza chefs where someone was doing a trial shift at a pizzeria and they were describing how difficult it was having to memorise the 120 pizzas that are in their menu, in a pizzeria that only does 60 pizzas a day. Somebody else pointed out that it should not be to difficult as they have 250 pizzas on their menu! I'll leave the rant about long menus and the paradox of choice for another article, but suffice to say that too many items will lead to increase wastage.
2. Start a waste list
In some restaurants I worked for the head chef would put a list by the bins and chefs had to enter whatever they were throwing away (or instance out of date food). This practice can help you to be more aware of dishes that are not selling or if your team are making batches that are too big or maybe they are not rotating the stock/supplies in the right way
3. Check expiry dates
You need to make sure that the ingredients you buy have a decent shelf life. Sometimes suppliers won't tell you some items are in their "clearance list" as they are near expiry date and the will just send them you! This is true both for ingredients like mozzarella for pizza - that normally have a couple of weeks shelf life and you can afford to buy in slightly larger quantities as what you don't use this week you can use the next - and highly perishable foods like salads in which case you want to pick the bags at the bottom of the crate, which will be newer and hence will expire later.
4. Plan on how to use off cuts
Can you make a fishcake with your fish trimmings? A pie with your meat trimmings? A pasta bake with your cold cuts off cuts? A soup with your veg unwanted bits? On the other side of the medal can you afford not to have a perfectly square turbot or diced carrots so that you can use all of it?
5. Join an App or offer a Surprise Box
The internet has made cutting waste a bit easier. Nowadays we have apps like Too Good To Go that can help you get rid of the last few portions at the end of the night/week. The main problem with those Apps it that you don get that much - typically 33% of the menu price, or in other words customers are paying £3.33 and expect to get £10 worth of food - and you pay, in percentage, very high fees - around £1.18 on the £3.33 purchase. I had a go at this myself but in the end I gave up as ti was just not worth the time and hassle, also because you have to list how many surprise boxes you will be giving away the day before, if you don't have loads of left overs - for instance you own a restaurant where most items are prepared to order as opposed to a carvery or Sunday roast venue - you may end up having to give away fresh food! An idea around this could be to offer your own surprise boxes that you can advertise on your social media or app, offer a "mystery dish" ( a bit like Lastminute.com hotels) or offer discounts at the end of the night or week so that when we close the doors there is very little left in the fridges.
I don't how I stumbled upon this search in Google, I certainly did not enter it myself, but it's obvious that people must google these sort of questions. The answer in brief is: not much. Certainly not running a small restaurant. Often if you count the hours you put in - and this must include all the admin work, trips to the cash and carry, phone calls etc - the hourly rate is not that high. This said, one can make a comfortable living as a owner-operator with a restaurant of about 35 covers, plus takeaway. Also as discussed on my previous post "is opening a restaurant for you", running a restaurant is, and must be, about passion and fulfilment.
Just the other day I was listening to Carol's Haidar's podcast "Your Table's Ready" (which by the way I highly recommend) where a restaurant owner was saying that you can hardly expect to make any money with just one restaurant and that's why concepts need to be scalable. This in my opinion it's BS and crazy. I appreciate running a restaurant in a capital has high costs, but betting on expansion and outside investment to eventually hope to make some money it's a risk strategy. Unsurprisingly Hacker Young accountants reported a 25% increase in insolvencies in 2019 compared to the previous year and over the same period the UK top 100 restaurant made a collective £82 million loss!
And that's exactly why I am passionate about small restaurants. If you open you must make money and if you don't, there is something wrong with the business that needs to be fixed.
You have been thinking about this for ages. You have a real passion for food and customer service (I hope) and now you want to take the plunge. You start thinking you have to quit your job, and what about the mortgage?
Running even the smallest of restaurants is no small feat. Apart from the rosy part where you serve fantastic dishes to smiley customers, there are a ton of things to think about. From compliance e.i. health & safety, food hygiene, fire safety to dealing with your suppliers, utility suppliers, staff and your landlord.
A lot of these things you can learn along the way, some you can Google and some you can find in forums or simply by asking around. But one thing you need to be damn sure about is your commitment. Your first year will likely consist of long days and long weeks and in general a lot of hard work.
If you are the kind of person that gets easily stressed, can't handle a bit of pressure or gets tired really quickly, this job is not for you. Most restaurants make 65% of their money at the weekend - talk about surges in demand! And even then all this orders are concentrated during 3 hours of Friday and Saturday!
Even if like me you have been working in hotels and restaurants for 20 years before opening your own, running your own small restaurant is a totally different ball game. The first thing you realise is that you are missing the infrastructure you were used to, the help you get by your colleagues and your superior and the company as a whole. I remember thinking, as the restaurant was small, how to best utilise the space. Should the counter be against the wall or in the middle, should we have a partition between kitchen and restaurant, how many tables and seats can we really fit in. In the end you realise that when you had launched a new concept/bar/restaurant in London, you had help from corporate designers and architects and you only had to give some practical input as they mainly design pretty things and you need functional "things". In the end for my first restaurant I used a designer I found through a friend of mine and for a modest fee he helped us maximise the space and gave us an idea of what we could do.
You will be in in front of customers and dealing with people most of the time, so you'd better be a cheerful, smiley person or at the very least someone that can put a mask on when problems arise, when your new baby or puppy kept you awake all night or you just had an argument with your partner (in business or life)
All in all this is a very hard decision you are making, so jot down some ideas, maybe a business plan, have an in depth look at your finances and an even deeper look at your self.
if you want to bounce some ideas or need some advice post a comment below or send me an email at email@example.com
Alan shares his experiences, struggles and tips to help other small restaurant operators.