Budget compliance and controlling costs are ongoing challenges for the food service manager.  And in these times of rising costs, managers must continually find ways to reduce food costs by identifying any inefficiencies and waste within the department.  

The top ten reasons for excess food costs include:

   1. A poorly planned menu
   2. Over production
   3. Poor purchasing practices
   4. Failure to check deliveries and poor storage practices
   5. Lack of standardized recipes
   6. Excessive waste in preparation
   7. Lack of portion control
   8. Theft
   9. Excessive use of supplements
 10. Poor accountability of costs

The typical response when faced with higher food costs is to change the menu and offer lower cost food items, i.e. macaroni and cheese instead of Herbed Pork Roast; use lower quality food; change vendors; and/or “cherry pick” with vendors. Unfortunately, these measures will not resolve the problem.  The goal is to reduce food cost, not the quality of the food service program. Finding ways to reduce food cost is not about cutting corners but keeping tighter control on costs throughout the flow of food from the initial planning of the menu, through the production and service of the meal to the resident. 

“5 Steps to Lowering Food Cost” is a cyclical strategy that manages the flow of food from menu development, through purchasing, delivery, storage, issue, preparation, service and accountability. Each step of the cycle leads to the next and provides the opportunity for continual improvement in the quality of service and financial management of food costs.

The “5 Steps to Lowering Food Cost” are:

1. Menu – It all starts with the menu.  In addition to meals needing to be nutritious, safe, and cost effective; residents expect creative, colorful and tasty meals. Standardized recipes and portion sizes are included in this step to allow menu pre-costing and a nutritional analysis. Whether a cycle menu, set menu, or selective menu is used it becomes the foundation not only for resident food satisfaction but for controlling food cost.

2. Procurement and Receiving – The goal is to purchase “the right product, at the right time, in the right quantity, from the right suppliers, and at the right price.”  By purchasing food from safe and approved suppliers you can be assured that the vendor complies with pertinent laws and regulations. Volume pricing is achieved by purchasing the majority of products from a single vendor. But prudent purchasing, detailed specifications, and competitive bidding are useless if receiving procedures and controls are not followed.  Establish receiving protocols to be used when accepting product that includes verifying the quality, size, quantity, and price of each item to assure product standards are met and waste is minimized. 

3. Storage and Issuing – Store food appropriately to protect the quality of the product. Foods should be stored immediately upon receipt, stored in the proper place, at the correct temperature, and properly rotated. Inventory should be monitored.  Lock storage areas when unattended and issue only the quantity of food supplies required for preparation. Physical inventories and unannounced spot checks should be performed on a routine basis.

4. Production and Service – Empower your staff to deliver a quality cost effective menu and meal service by establishing quality standards, conducting employee training, providing the necessary equipment and tools, and documenting production planning.  Accurate forecasting, standardized recipes and controlled portions minimize waste. Expect and train your staff to maintain a “service mentality” by making every effort to personalize service.  Solicit resident feedback to improve the quality of the menu and service.

5. Financial Accountability – Knowledge is power. An operating budget is critical. A budget creates a standard against which to compare actual and budgeted performance. Knowing your actual food cost provides an early warning system to potential food cost problems. Calculate your actual food cost for a given period of time by knowing your starting inventory, ending inventory, and the amount of food purchased.  Calculate your actual food usage using the following formula:

Actual food usage = Beginning Inventory + Purchases – Ending Inventory