Food cost blowout on a set menu
Your 80-seat restaurant runs a three-course set menu at $65 per head. Last month you served 1,400 covers. Food cost came in at $41,300 against a budget of 30% of revenue ($27,300). The menu has not changed in eight months. Your supplier has raised beef prices 18% and dairy 12%. Portion audits show the kitchen is over-portioning the main by about 15% on average. Waste logs show 6% of food purchased is being discarded, mostly trim and over-production on quiet nights. Staff say the set menu 'feels cheap' and are adding extra bread and sides without charging.
1. Diagnose the food cost gap and quantify where the money is going.
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Step 1 - Establish the numbers
- Revenue: 1,400 covers × $65 = $91,000
- Actual food cost: $41,300 = 45.4% of revenue
- Budget food cost: 30% = $27,300
- Gap: $14,000 over budget
Step 2 - Break the gap into causes
- Supplier price rises. Beef +18% and dairy +12%. If beef and dairy are, say, 35% of food spend, that alone adds roughly 4–6 percentage points. Estimate: $41,300 × 0.35 × ~0.15 ≈ $2,200.
- Over-portioning the main by 15%. If the main is ~40% of plate cost, a 15% over-portion adds ~6% to total food cost. Estimate: $41,300 × 0.40 × 0.15 ≈ $2,500.
- Waste at 6% of purchases. 6% of $41,300 ≈ $2,500 of food thrown away.
- Uncharged extras - bread and sides given away. If 30% of covers take an extra side worth $1.50 cost, that is 420 × $1.50 ≈ $630, plus bread.
These estimates account for roughly $7,800–$8,000 of the $14,000 gap. The remainder is likely menu engineering - the set price has not moved in eight months while input costs have risen, so the menu is simply underpriced.
Step 3 - Rank the causes
- Structural: the $65 price is stale relative to costs. This is the biggest single lever.
- Controllable: over-portioning, waste, uncharged extras. These are process failures.
- External: supplier increases. You can partially mitigate by re-tendering or substituting.
Why this matters
The exam tests whether you can turn a vague 'food cost is high' into a quantified diagnosis. Without the split, you might cut portions when the real problem is a stale price point.
2. Propose a corrective action plan with owners, timelines, and how you will measure success.
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Corrective action plan
| Action | Owner | Timeline | Measure |
|---|---|---|---|
| Re-cost every dish from current supplier prices and recipe cards | You + head chef | 1 week | New plate costs vs old |
| Standardise portions with scales, scoops and photo guides at the pass | Sous chef | 2 weeks | Weekly portion audit within ±5% |
| Re-tender beef and dairy; trial 2 alternative suppliers | You | 3 weeks | Price per kg vs current |
| Introduce a waste log by category (trim, over-production, spoilage) | Kitchen hands supervisor | Immediate | Waste below 3% of purchases |
| Stop free extras; price bread and sides on the menu | You + front of house | 1 week | Extras revenue recorded |
| Review the $65 set price against new plate costs | Owner | 4 weeks | Target food cost 30–32% |
| Daily pre-service briefing on specials and portion control | You | Ongoing | Briefing log |
Sequencing
- Stop the bleeding first - portion control and waste logging are free and immediate.
- Then re-cost so you know whether the price must move.
- Then negotiate suppliers, because you need accurate volumes to bargain with.
- Finally, price. A price rise is the last lever because it affects demand; use it once you know the true cost.
Measurement
Track weekly: food cost %, waste %, portion audit results, and supplier price per kg. Review at 30 and 60 days. If food cost is not trending toward 32% by day 60, escalate to the owner with the data.
Why this is the exam answer
It separates controllable from structural causes, assigns ownership, and sets measurable targets. The judgement is knowing that portion control is fast and free, while repricing is slow and carries demand risk - so you fix the process before you touch the price.