Are Rising Food Costs Killing Your Restaurant’s Profits?

Are rising food costs decreasing your restaurant’s profits?  You better act now!  We anticipate the cost of food, especially the staples, to continue to rise.  Food and Beverage Departments for hotels are typically low profit areas and can easily turn into no profit areas if you do not react quickly.  Here are some things that you can do: 

Know Your Food Costs – It is surprising how little hotels actually know about their food costs.  Most hotels have a breakfast buffet, however, few hotels have any idea what their food cost is on the buffet.  Most just assume they are making a high profit because they were taught that buffets were always high profit.  Not true.  Spend the time to calculate your buffet cost.  You may be surprised to find out that your buffet food cost is 40 or 50 percent!

Here is a simple way to find out the food cost for your buffet:  Have the kitchen log every single item that is used on the buffet during a 7 day period (10 cases of bacon, 22 cases of eggs, etc).  At the end of the week, add up the total food expense and divide it by the amount of revenue you posted for those days.  Be sure to do it for a whole week because you will find that your weekend food cost is very different than your weekday food cost.  Also, be sure to add in all items included with the buffet such as juice and coffee.

Re-engineer Your Menu – Hopefully, you are using a spreadsheet or computer program to monitor your menu engineering.  Be sure to re-evaluate your menu every single month.  For additional menu engineering help, check out this article.

Evaluate your menu prices – Now that you know your food cost and your menu engineering, be sure to evaluate your menu prices.  You will most likely have to raise prices.  However, don’t just raise all of the prices across the board, be very strategic.  Raise only the prices of the items that are the best sellers but do not have the best profit.  Keep the prices the same on the items that do not sell well but have a high profit.  Replace the items that do not sell well and do not have a high profit.

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Better Buffet Service

buffetThere are many times when I am eating breakfast in a hotel when I wonder why hotels even offer buffets for breakfast in their restaurants.  I can see the answers from the executives now;  “It is a faster breakfast for our busy guests!”  Or, “The costs will be lower due to the high volume and less staffing!”  Or, “Our guests prefer to have a buffet!”  What I usually see when hotels offer buffets though, is terrible service.  I am sure the guests do not prefer bad service!  It is not that buffets and bad service go hand in hand, but it really gives servers a reason to become lazy.  The fact is that almost everyone will tip, whether or not they received good service, when they eat at a breakfast buffet.  The line between the self-service aspect of a buffet and the service side from the server often becomes blurred and a guest will just tip the customary ten to fifteen percent of the check no matter what type of service they receive, just to be courteous.

Nowadays, there are not many service oriented managers that do not know that the last impression a hotel makes on a guest, usually at breakfast, can heavily affect guest service scores.  Most people also probably know that customers would prefer no service to bad service (thus the invention of ATM machines).  Why then, would a hotel allow this type of service to go out to their guests in hopes of saving some money?  If you have a subpar breakfast buffet service, make sure that you have the following items in place to change that service for the better.

Standards – Ensure that your staff is familiar with the standards of your hotel brand and follows them.  If you do not have a brand, make some standards and follow them.

Host – Have a host.  This may seem like a useless cost, but having a host seat guests will make the restaurant seem more like a restaurant and not like a cafeteria.

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