Cutting food costs, not quality

Chef Al Massa at Michael’s on East slashed costs, brought in more adventurous fare—and increased traffic along the way.

Cutting food cost is a bit like doing the limbo: lower the bar so far and your odds of staying on the dance floor diminish. Lower it a bit more and you just might cut your way out of business. That’s because along with cost you’ll likely start cutting quality. And quality is something no restaurant can afford to skimp on right now.

While it may feel like a rock and a hard place situation, there’s a lot operators can do to cut food costs without sacrificing quality, says Jim Benson, corporate chef at BiRite Foodservice Distributors, Brisbane, California. Benson was formerly executive chef at Victoria Station Restaurants and co-founded Roadhouse Restaurants, predecessor to California Café Restaurant Corp. “As an operator, you’re always asking yourself if it’s more important to have a better food cost or to increase gross profit dollars. The easy part is learning how to have a low food cost on an entrée or an appetizer; the more challenging part is learning how to incorporate it on your menu, price it and market it so it drives sales and gross profit. Ultimately, you bank dollars not percentages.”

He recommends operators cost out every item on their menu and analyze their sales mix often enough to know when and how to react when costs go up. “You have to analyze not only for item popularity, but also for a mix of spending thresholds and for gross profit contribution. Sharp operators monitor their mix on a day-to-day basis and make adjustments. Having a fluid format that enables you to make changes in this environment is a benefit.”

Kevin Moll, president of Denver-based National Restaurant Consultants agrees regular menu analysis is key to keeping food costs in check and margins up. “The menu is the most powerful tool. What is sold, what drives income and costs, what drives your brand are all based around the menu. If you don’t have cost-effective, highly profitable signature items merchandised in prime positions on that menu, it needs to be updated.”

Moll adds that tackling food cost, while important, should be approached as a positive not a negative. “Don’t do cutting that any guest can see,” he says. “And never use the word cut or reduce when talking with staff. Rather, it’s improve, revise, enhance. It’s a matter of perspective, but it’s hugely important in terms of protecting your brand.”

Less is more at Michael’s on East

Michael’s on East, an award-winning upscale restaurant in Sarasota, Florida, has perfected a positive, “less is more” approach to reducing food cost. Under executive chef Al Massa, the restaurant has over the past three years shaved four points off its food cost while increasing traffic.

“We took a value approach to combat food cost,” says Massa. “For Restaurant Week a couple of years ago, we offered a three-course $25 menu at dinner and a two-course $15 lunch special. It was so successful that we made it a regular part of our operation. Each month, we highlight an ethnic or regional cuisine. The dinner menu offers a choice of two appetizers, three entrees and two desserts. We pair wines at $5 a glass. It’s a terrific value and it drives traffic. The first summer we ran it we did 2,000 more covers than we did the summer before.”

In addition to bringing more customers in, the menu lets Massa get creative with bargain-priced ingredients, as well as to plate smaller portions. “Instead of serving our normal eight- to nine-ounce slab of swordfish, we’ll do six ounces, cut into medallions. They’re thick-cut and cook beautifully, and we stack them for great presentation. Or we’ll do two, three-ounce filet medallions. We also do a lot with pork and chicken, and by doing regional and ethnic themes we’re able to incorporate a lot of low-cost vegetables and grains,” he says.

A recent menu included a curried chicken that was the top-seller at both lunch and dinner. “It was a six-ounce airline chicken breast that cost me a little more than $2 to put on the plate,” Massa says. “It had a tamarind glaze and we served it with apricot couscous. The flavors were interesting and with couscous as a side it was inexpensive. If we can sell 120 of those at a food cost of 25 percent, that’s how we’re going about reducing our food cost – by having some of our lead sellers be our value menu selections. In the old days, we sold a lot of lamb and veal at $38 to $40, but there’s little margin on those,” he adds. “They’re loss leaders. They’re still popular and we still offer them, but we can’t lean on them to drive sales in this economy.”

Massa has also jumped on the lobster market, taking full advantage of per-pound prices around $5 for Maine lobster. Simple broiled whole lobster is offered, and the top-selling seafood entrée is Pan-Seared Scallops & Lobster. “It’s the lobster that drives it. We use $5 worth of lobster. We sell hundreds of those a month because lobster’s so appealing. You can sell a lot of something that you make a lot of money on versus a lot of something that you don’t make a lot of money on. We’ve gotten more aggressive about doing the former with ingredients like lobster.”

Michael’s also recently added a lobster-laden pasta dish to the menu and a lobster roll sandwich to the bar menu. “It’s our biggest selling sandwich at lunch,” he says. We price it at $18 for two lobster rolls and people are happy to pay it because it’s lobster.”

While most of the core menu has not been tinkered with, Massa did make a change to how Michael’s steaks are sold. They’re now sold as “steak on a plate,” minus the traditional potato, sauce and vegetable accompaniments. Concurrent with the change, a new menu of a la carte sides was introduced. “As our steak prices increased we had to do something to retain our quality without raising prices. So we went with an a la carte approach that lets us keep our meat prices relatively low,” Massa says. “We worried customers would balk at not getting their potato and veg, but they didn’t skip a beat.”

The sides range from traditional roasted asparagus and baked potatoes, to signature items including white truffle and herb roasted red potatoes, sautéed royal trumpet mushrooms, potato croquettes with apple bacon and gruyere and truffle macaroni and cheese. “We still sell potatoes and asparagus, but we made the other choices appealing enough that people don’t mind paying for them. They’re large enough to share and they’ve generated strong add-on sales. The idea isn’t just to cut costs, it’s to build sales.”

12 Ways to cut cost, not quality

  1. Analyze costs on every menu item and be flexible enough to react. “It’s one thing to know costs, but if you’re locked into your menu it’s useless information,” Benson says.
  2. If you don’t already have them, create new high-appeal/low-cost signature items.
  3. Avoid couponing and discounting. Instead sell value menus and combo meals. “Mix and match items in a format that makes economic sense and gives the guest great value,” says Moll.
  4. Build new lines of business, such as catering, takeout, breakfast or late-night dining. “Generate real growth, don’t just get artificial growth through bogus menu pricing,” Benson says.
  5. Innovate outside of your core menu; cutting there cheapens your brand.
  6. Buy in bulk. “Would a distributor drop their price by 10 percent to sell 15 cases as opposed to one? Probably,” Moll says.
  7. Consolidate suppliers and negotiate. Instead of spending $300 with each of four distributors, spend $1,200 with one and increase your leverage on price.
  8. Buy seasonal. “It’s the most cost-effective menu approach,” Benson says.
  9. Try alternative proteins. Value-added beef cuts off the round or shoulder, like hangar and flatiron steaks, can save you 20 to 30 percent, according to Benson.
  10. Try prepared, convenience products. New packaging technologies make them better than ever and what you save on labor and yield can more than offset higher price tags.
  11. Always use weights and measures to ensure portion control.
  12. Talk trash. Let staff know you’re watching what gets dumped and follow up by using clear garbage bags, weighing trash and/or restricting dumpster access.

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