COULD YOUR KITCHEN BE COSTING YOU YOUR BUSINESS

As trends have shifted over the past few years, most bar owners came to the realization that they couldn’t generate enough business by focusing solely on drink and so kitchens became a standard addition to the progressive bar.

Many of the bar owners that I have worked with were the first to admit that far from being their area of expertise, they were happy to leave the management of the kitchen to the chef. Sometimes this worked, other times it didn’t. I worked with a bar owner who ran his kitchen at a four figure loss for three months before it was brought to his attention, then there was the bar with more than 80 different dishes on the menu because the chef thought the more menu items, the more opportunities to sell…

Before you think this is an anti-chef rant, it’s not, I have great respect for the talented individuals that run profitable and award winning kitchens. However, you are the owner of the business and it is ultimately your responsibility to know where the costs, profits and losses lie in this vital area.

To work out if you have a profitable kitchen or not, follow these 8 steps:

  1. Work out the individual cost of every menu item you serve. To this, download the Recipe Costing Calculator below and start to create a Recipe “Bible” for the kitchen whereby every item is costed precisely based on current supplier prices. Bear in mid you’ll have to change this every time your supplier pricing changes.

  2. Review the results and decide if there are some dishes worth keeping on the menu. Some may be costing you money or generating so little profit that it’s not worth ordering the ingredients.

  3. Perform an inventory of all food items in the kitchen. To do this, you’ll need to download the Kitchen Stocktaking Sheets below.

  4. Keep a running tally through your POS system of every dish served in a month. Are there dishes that are never ordered? Again, are you storing ingredients you don’t need?

  5. At the end of the month, perform another inventory. You will now have an opening inventory and a closing inventory. This coupled with the cost of your deliveries and your revenue will allow you calculate whether you are profitable or not. Use the Kitchen Stocktaking Sheets to help with this calculation.

  6. There are two figures you want: Your Ideal Profitability and your Actual Profitability. Your Ideal Figure comes from multiplying the profit you should have achieved per dish based on your Recipe Costing for the month. Your Actual Figure is based on the stock that that is left in the stores at the end of the period. The closer these two figures are to each other, the better your kitchen is performing. If your Ideal Figure suggests you should have achieved a Profit margin of 72% and your Actual Result yields you a 58% Margin, you have a problem.

  7. If you do determine that you have a problem, then it’s time to roll up your sleeves and get your hands dirty; you now need to find where the problems lie. It could be that there is too much wastage, it could be that food items are being stolen, it could be that food is expiring too quickly. I’ll deal with these points in the next article, but now that you are measuring your kitchen’s performance, you at least know if there is a problem or not.

  8. If your kitchen is performing well, congratulations, you and your chef make a great team. If not, don’t worry, we’ll help you find the ways to address a poorly performing kitchen in the next article.

Download: Recipe Costing Calculator
Do you know the accurate cost prices of your dishes? Can you be sure that your dishes are priced correctly? Is the Chef accurately analyzing each dish before putting it on the menu?  Download this Recipe Costing Calculator and calculate the costs and profit margins of individual dishes so you can control the costs in your kitchen and help to ensure your food business is profitable. Preview>>

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