Restaurant Food Cost at 42% against a 32% Target
A 90-seat restaurant has monthly sales of KES 1,200,000. The latest profit and loss shows food cost of KES 504,000, labour at 30% and waste at KES 36,000. The owner's target food cost is 32%. A stock count reveals an 8% variance between issues and recorded sales; portion scales are used only at the grill station. The main supplier has raised chicken prices by 12%, but menu prices have not changed for 14 months. The kitchen throws away about 1.8 kg of edible food per day, mostly trim and overproduction. Two new cooks were hired last month. The menu has 42 items, and the walk-in is crowded with slow-moving stock. The owner wants a 90-day plan, not a price rise.
1. Quantify the food-cost gap and the value of the waste and stock variance, showing the calculations. Which figure should the owner tackle first and why?
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Food cost is 504,000 ÷ 1,200,000 = 42%. Target food cost is 32%, so the gap is 10 percentage points, or 0.10 × 1,200,000 = KES 120,000 per month. To reach 32%, food cost must fall to 0.32 × 1,200,000 = KES 384,000.
Waste is 36,000 ÷ 1,200,000 = 3% of sales. Stock variance is 8% of issues; if food issues are approximately the food cost, 8% × 504,000 = KES 40,320 per month of unexplained loss, though the true figure depends on opening and closing stock.
The owner should tackle portion control and stock variance first, not supplier prices. The 8% variance and unmeasured portions are controllable within weeks, require no menu price rise, and together represent more than the waste line. The 12% chicken increase is real, but it affects only part of the menu and cannot explain a 10-point gap on its own. A quick win is to put scales at every station and reconcile daily issues to sales before changing suppliers or prices.
2. Identify the likely causes of the variance and waste, linking each to a control you would install in the first 30 days.
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Likely causes and controls:
- Unmeasured portions outside the grill: Scales only at one station mean rice, stew, chips and salad are portioned by eye. Control: scales and standard recipe cards at every station; spot-check five plates per service.
- 42-item menu: A large menu increases prep, holding and spoilage. Control: menu engineering to identify low-margin, slow-selling items; suspend or reduce the worst 8–10 items for 30 days.
- New cooks: Two recent hires may not know portion sizes or trim standards. Control: documented recipes, a two-week supervised sign-off, and daily feedback.
- Overproduction and trim waste: 1.8 kg/day suggests forecasting by habit. Control: production sheets based on covers and sales mix; use trim in stocks, soups or staff meals where safe; record waste by type.
- Crowded walk-in: Slow-moving stock is hidden and expires. Control: FIFO labelling, par levels, a weekly stock rotation and a clear delete list.
- Supplier price increase: Chicken up 12% with no menu change. Control: re-cost the top 20 dishes, negotiate or compare two suppliers, and adjust portion or garnish rather than raising all prices.
3. Draft a 90-day sequence with measurable targets and explain how you would avoid damaging quality or morale.
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Days 1–30 - measure and stabilise. Install scales at all stations, introduce daily production sheets and a waste log, and reconcile stock weekly. Target: reduce stock variance from 8% to 4% and food cost from 42% to 39%. Communicate that the aim is consistency, not blame; involve the new cooks in recipe testing.
Days 30–60 - menu and purchasing. Complete menu engineering, remove or re-engineer the weakest items, re-cost the top 20 dishes, and set par levels for the walk-in. Target: food cost 36% and waste below 2% of sales. Keep popular dishes but adjust garnish and portion specification rather than shrinking the main protein without explanation.
Days 60–90 - embed and verify. Retrain on standard recipes, audit five plates per service, review supplier prices and introduce a weekly variance report. Target: food cost 32–34%, waste below KES 24,000 per month, and variance below 3%.
To protect quality, do not cut portion sizes across the board; instead control trim, overproduction and garnish. To protect morale, share the numbers, ask cooks for solutions, recognise improvements, and avoid using the variance report as a disciplinary tool before training is complete.