When food prices rise, it can be a big pain for restaurant owners. In the US, restaurants spend about 20-40% of their revenue on food products. Restaurant owners need a system to keep track of their food costs, so they can be competitive and make the right choices for their menu items. In addition to understanding the basics of food rates, owners also need to know what is driving these rates and how they can take steps to mitigate them.
The recent rise in food prices has been due to many factors. Extreme weather hurt crop yields, the war in Ukraine impacted grain prices and avian flu constricted egg supply. Many of these events are out of a restaurant’s control, but food companies have been using them as cover to raise prices over and above what their rising costs would indicate.
A good food rate formula will help a restaurant owner figure out how much they should be charging for each item on their menu. The formula usually starts with the total from a physical inventory and subtracts the cost of any non-food items that are being used, such as the cost of employee meals, coupons, 2 for 1 specials, etc.
From there, the formula will subtract any marketing expenses like free samples or promotions. The result will be the restaurant’s basic food cost figure, which can then be compared to their competitor’s food rate figures to determine how well they are doing in their market.
The lower your food rates are, the more profitable your restaurant will be. The key is to find ways to cut your operating costs without cutting corners, so that you can still deliver the quality that your customers expect.
If your food costs are higher than your competitors, it might be time to look for new suppliers. You may also want to experiment with different recipes, so that you can create items that are just as delicious but at a better price point for your customers.
Another way to keep your food costs down is to use low-calorie, high-protein foods. These are generally cheaper than fatty, sugary foods and can keep you feeling full longer. Vary your vegetables and use spices to add flavor without adding a lot of calories.
Despite the rise in food prices, consumers in the lower income groups have seen a decline in their share of disposable personal income spent on food at home, which means that they are less affected by these rising food rates than those with more money to spend. However, this isn’t helping the overall food situation as some people are turning to food banks for assistance. For the rest of us, the best thing to do is just try to stick with healthy eating as much as possible. This includes avoiding too many processed foods and making sure that you are getting enough protein.