Food costs are probably the issue foodservice operators talk about most - yet understand the least. We all know we must control costs, but in order to control them we must also be able to measure them effectively. When faced with a food cost problem, many operators try the quick fix of raising prices to offset high costs. This can be counter-productive and actually decrease sales.

More often than not, we become fixated on percentages - losing sight of the fact that percentages should only be used as a guideline. The bottom line, of course, is making a profit. In order to do so, you must set up operational procedures that will allow you to know and control your food costs.

Step 1: Standardize your Recipes
The first step is to establish standard recipes for all menu items, including specials. This will give you an accurate picture of what your cost on every item should be - your potential food cost. In fact, just the act of developing standard recipes will give you tremendous insight - you will know more about your operation than you ever did before!

A standard recipe should be developed for every item with more than two ingredients. It should detail all ingredients in the dish as well as a basic cooking and plating procedure. It will tell you if the item can be sold at a profit within your market position and what that profit should be.

Step 2: Establish Purchase Specifications
The next step in controlling food costs is to establish purchase specifications. These will be determined by what's on the menu, the standard recipe for each item, production or batch sizes, what's available in the market and storage capacity. The purchase specification should detail the name of the product, the unit of purchase (pounds, liters, case, dozen, etc.), grade if applicable, appearance, temperature at delivery, type of packaging and any other information that will assist in evaluating the product once it is received.

Control of purchasing is critical to maintaining profitability. You must determine if inventories are at the proper level. Large inventories lead to increased spoilage, shrinkage due to pilfering and higher carrying costs. That's why it's so important to establish a par stock level that is strictly followed. Also, make sure your suppliers have copies of the purchase specifications. If you regularly find yourself running low on certain items and sending staff out to purchase these items at retail, you know you're incurring unnecessary costs. Purchase specifications will help alleviate this problem and allow you to take advantage of lower seasonal prices on a variety of products. Seek competitive bids on high cost items. Finally, purchase these items in the smallest practical unit size.

A purchase specification should include all important aspects of the product being purchased. This way, your supplier will be certain of the product you are looking for and your receiver will know exactly what to expect.

Sample Purchase Specification

Menu Item	Sirloin Steak Sandwich
Product	Bottom sirloin butt steak 170 g boneless portion
NAMP Number	1185
Grade	USDA Choice
Weight range	170 gram with a 10 gram tolerance
Trim level	Zero trim
Packaging	Individually vacuum packaged 12 pieces per box
Special considerations	Aged minimum 10 days
State of refrigeration	Fresh product- temperature not to exceed 4°C

(NAMP is the North American Meat Processors Association, which has established guidelines for all meat products sold in North America and assigned each item a number for reference by purveyors and purchasers.)

Step 3: Standardize your Portions
Once you have implemented standard recipes and purchase specifications, the next important step is to standardize portion sizes. The portions should be large enough to satisfy customers without excessive waste. They must reflect the potential food cost and menu price.

Some helpful tips for easy portion control: 
 portion as much as possible ahead of service in the preparation area;
 use individual dishes if possible;
 provide appropriate portion control utensils;
 frequently spot check plating for proper portions.

Step 4: Receiving and Storage
One very important component to food cost control that is often overlooked is receiving. Are you receiving all the items you are paying for and do they adhere to your purchase specifications? Do you have a set of receiving scales and are they accurate? Are prices charged the same as those quoted? Is receiving done in a controlled area? Who is doing spot checks of products received?

Control of your storage area is critical to maintaining proper cost controls. All storage areas including walk-in boxes should be locked at all times. Keep tabs on all keys. Make sure the walk-in temperatures are correct and that the thermometers are checked regularly. Track high cost items against sales. Ensure that all production items are code dated and rotated properly.

Step 5 and Beyond!
By using some of these tools, actual food cost should be in line with the potential food cost. If, however, a reduction in food cost is necessary and raising prices is not an option, you may want to consider some other course of action.

Review purchase specifications to source alternate products that will not affect the quality of the finished menu item. Consider long-term purchase contracts on high cost or high volume items - or join a purchasing group. Look at portion sizes to see if there is any opportunity to reduce them without affecting customer satisfaction.

Another way of reducing costs is to focus on selling more of your lower cost items to offset some of the higher cost items. Appetizers, soups and desserts tend to be lower in food cost and selling at least one of them, along with an entrée, to each customer can go a long way towards reducing costs. What are you and your staff doing to promote these items? Look for any loss leaders on your menu and ask yourself if they are really working for you.

Always remember that you go to the bank with dollars and cents - not percentages. It makes more sense to make a $5 gross profit on a menu item with 50% food cost than $3 gross profit on an item with a 30% food cost. Don't get fixated on percentages - focus on profits. When you do, you should see them increase!

Dominic Zoffranieri is the owner of JDC Hospitality Inc. and co-owner of Dipamo's Barbeque Restaurant in Toronto. Read his complete bio in the Autumn, 2003 edition of Your Culinary Connection.