Fixing Your Food Profit Margins
/You book enough business, your pricing aligns with the market, and your customers leave feeling satisfied. So, why do you still have razor-thin profit margins? If you feel like you’ve tried everything without seeing results, it might not be a matter of producing more income. Instead, you may need to focus on lowering expenses.
Maintaining a comfortable bottom line is a balancing act. When you’ve exhausted all of your money-making strategies, turn your sights to the other side of your P&L statement: the losses. Every company has a cost of doing business, but many overspend without even realizing it. As a result, too many kitchens operate with a nominal rate of return.
If you want to break the cycle and start seeing more cash in the bank, keep reading for cost-saving tips to increase profitability without impacting your client experience.
Reduce food waste
In many kitchens, tossing out leftover scraps is the norm. We’re talking carrot tops, broccoli stalks, organ meat, animal bones, and other less-than-savory items. But sending these things to the landfill isn’t just bad for the environment; it’s also a missed opportunity to maximize your ingredients! With a dash of creativity, you can turn kitchen scraps into rich stocks, hearty salads, nutritious sauces, and more. They may not star in any meal but can add flavor and texture with minimal overhead.
Sometimes, food waste is produced from spoilage instead of undesirability. We don’t often consider the expense of letting food wilt or rot, but tossing out spoiled ingredients will eat into your bottom line. Food waste can account for as much as eight percent of food costs, so focus on addressing this pervasive problem!
Practice strategic menu planning
Your menus determine your shopping list, so if you regularly spend more than you expect, revisit your menu strategy. By being intentional about the dishes you serve and the ingredients used in each, you can reduce costs simply with a smarter approach.
Here are a few things to consider when planning your menus:
Build meals around in-season ingredients to avoid paying a premium for out-of-season items. You can often find reasonable rates by sourcing from local suppliers, so staying seasonal will help you leverage and support your community.
Go big with the sides! If your menus feature a number of tasty (and cost-effective) sides, you can get away with smaller portions of higher-cost proteins.
Embrace plant-based alternatives. Swap traditional cuts of meat and protein for vegetarian and vegan-friendly options like tofu, tempeh, seitan, lentils, and beans. These low-cost ingredients are healthy, filling, and just as easy to flavor!
Align key ingredients for client menus. Try using the same proteins and produce for events within the same order cycle whenever possible. Instead of buying a bit of everything, you can purchase what you need in bulk, often for a discounted price. Plus, it simplifies storage use!
In addition to saving on food, strategic menu planning can reduce labor expenses by increasing kitchen efficiency. A bit of thought goes a long way for your profit margins!
Cut costs on base ingredients
There’s a noticeable difference between prime and standard-grade beef. The same goes for seafood and most fruits and vegetables. But outside of these main features, people can’t tell the difference between ingredients. So, if you can trim costs by using store-bought broth over handmade stock, take the savings! (Of course, using food scraps is ideal — but that’s not always feasible in a busy kitchen, especially in large quantities.)
Other budget-friendly alternatives to consider include dry pantry goods (flour, sugar, baking soda, etc.), oils, vinegar, grains, and other base ingredients. Let your premium ingredients shine with flavor and texture while cutting costs on secondary ingredients.
Change takes time, so don’t expect to see your expenses slashed overnight. But with gradual adjustments, profit margins will rise, and in many cases, so will your team’s productivity. Whether it’s changing how you plan menus or adjusting your next food order, start small and watch the effects snowball into meaningful company-wide change.
Clint Elkins is the VP of Sales at SB Value, a group purchasing program designed to reduce catering, kitchen and food-service costs by leveraging the collective buying power of thousands of companies.
