Man manually managing inventory.

Why Food and Beverage Cost Control is Essential to Restaurant Success

Did you know that 50 to 60 per cent of all restaurants fail within their first three years? The renowned Cornell Nolan School of Hotel Administration got to the bottom of the causes in its Hospitality Quarterly. Their learning: Next to the concept and the choice of location, another reason for failure ranks high. A lack of food and beverage cost control is often to blame when the dream of owning a restaurant collapses like a soufflé in a draft. Digital tools help minimise this risk factor.

Payroll and food cost are the most important cost drivers in the foodservice industry. On average, they account for 50 per cent respectively 30 per cent of the turnover. It is not surprising that the average profit margin of gastronomy is a scant 6.2 per cent. Hotel restaurants have a clear advantage here: they still have the revenue from accommodations. Still, many hotels are now moving toward leasing their restaurant operations to outside operators. “They have become a zero-sum game for us,” says Guido Landini, general manager of Hotel Diamante in Turin. “Hotels have many aspects to deal with, and if you can’t control them properly, food service eats up all the margins.”

Hardly any gastronome can answer the question of running costs off the top of their head. Of course, everyone has their own talents. Being a brilliant cook or an outstanding host does not necessarily mean being a good manager at the same time. When it comes to controlling, many restaurant owners walk on eggshells.

Food and beverage cost control is essential if food service is to be run profitably. In other divisions, it might be sufficient to check stocks once a month or a quarter. But in gastronomy, an ongoing overview is needed in order to create the most accurate food calculation possible – after all, fresh food is also ordered several times a week. 

Fresh veggies that could become food waste with wrong inventory management system.

Food waste management: When it comes to the cost of goods, the profit is not only in purchasing

Now, of course, restaurateurs can reduce food cost by saving on the orders – at least up to a certain point. Excessive cost-cutting measures, in turn, have an impact on quality. In top gastronomy, in particular, high-quality raw materials are needed to offer the desired level of service and satisfy the guests. After all, they don’t want supermarket quality; they want a holistic experience.

So another important tool in cost control is food waste management. Around 15 per cent of supplies end up in the trash because raw materials are not used optimally or simply expire. Add to that shrinkage and theft. With margins so low, this can easily break your neck. But even from the point of view of sustainability, food waste is no longer the order of the day.

Inventory as a means of determining food and beverage cost control

Only one thing helps here: regularly checking the complete inventory. And – see above – not only on a monthly basis but ideally with each new delivery. Especially in the case of high-value and perishable foods such as meat and fish, even a daily check is a brilliant recipe for success.

Now you’re probably wondering how you’re going to manage that, too. Your restaurant is fully booked, the staff is scarce, the hectic is great. And in this situation, you should assign at least two people to count the stocks in the warehouse and check them off on a list in a manual process? Impossible. The manpower is needed in the kitchen and in-service – time is money!

Digitalisation becomes a game changer: How to start digital transformation management in your food service

Is it really unavoidable to spend hours and hours checking product availability and expiry dates in a manual process, tying up staff? The answer is simple: no.

Even in a deeply analog craft like the restaurant industry, digital transformation management is making inroads. Keeping handwritten lists and then transferring them to complex software was yesterday. Today, digitalisation opens up completely new possibilities. Imagine simply scanning a delivery bill and importing all the data in the blink of an eye instead of entering everything manually. The time saved is immense. But Storate can do even more: the software can automatically bundle current consumption values and automate food and beverage cost control. Eliminating food waste in restaurants is becoming as easy as putting a pizza in the oven.

Check out how quickly our app can scan a delivery note, saving your business hours of repetitive manual work.

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