101 Ways to Deal With Food Cost – Part 7


1) Establishing Controls – Budgeting and Organizational

Business plan

If you haven’t already done so, develop a business plan that spells out, in detail how your goals and objectives are to be achieved.

Operational Controls

Important! A restaurant needs to exercise control in a number of operating areas. Budgetary controls are used to help achieve these objectives. The main operational:

· Quality of food and beverages
· Employee costs and performance
· Control of equipment and utilities
· Control over sales and cash
· Operating expenses

Use industry resources and your sales history to help you come up with operating budget.

2) Developing a Food Service Operational Budget – The Basics

Estimate sales revenue

This is often the most difficult part of the budget due to its volatility.

Estimate expenses

That are related to sales such as food, liquor and wine and operational supplies.

3) Cash Flow – The Essentials

Statement of Cash flows

This most important report tells you if your business is on or off target. Use your own computer program to generate this report or get your accountant to run a report NOW! A statement of cash flows starts with the bottom of your profit and loss statement – the line that shows your net income. Several adjustments are then made to that number, including reducing the income by invoices recorded as income that have not yet been paid, adding back depreciation, and several other adjustments.


Your organization can accomplish very little without adequate funds. Ensure your cash reserves are adequate to cover slow months, make emergency repairs and improvements and implement marketing projects.

Set realistic targets and goals for growth for your business

For example, aim to acquire 100 new repeat customers every month. Lower operating expenses next month by 2%. By letting your staff know that they can do their part, you will be able to meet your goals and build your business accordingly.

4) Insurance Costs

Liability insurance

You also should review your health insurance, you may need a higher amount of coverage. You may want to adjust your deductibles based on past experience and you may be due a better rate because of your claim history.


With workers compensation insurance, you need to make sure that your employees are properly classified. Consider removing the owner from workers’ compensation if covered elsewhere.


Your premium is based on a rate assigned to each classification of employee and the amount of gross wages paid. Certain job descriptions put an employee at greater risk than others such as a chef versus an office bookkeeper.

Health Insurance

You also should review your health insurance coverage and shop the market for group programs that may be suited to your employee base. Look closely at the invoices you receive from your health insurance carrier; you will be amazed at what you may find – employees who have not worked for you in months, family premiums for single individuals etc. Put someone in charge of reviewing this invoice every month to ensure that you are paying the correct amount for eligible employees only.

For more info on Ideal Software’s Inventory Management system for controlling food cost IdealStockControl

Ideal Stock Control for Managing Restaurant Food Cost

To view Part 1 in our series “101 Ways to deal with Food Cost” 33 Possible Food Cost Problem Areas

To view Part 2 in our series “101 Ways to deal with Food Cost” Back to Basics

To view Part 3 in our series “101 Ways to deal with Food Cost” The Menu, Pricing and Standardized Recipes

To view Part 4 in our series “101 Ways to deal with Food Cost” Purchasing and Receiving

To view Part 5 in our series “101 Ways to deal with Food Cost” Safety and Security

To view Part 6 in our series “101 Ways to deal with Food Cost” Technology

To view Part 8 in our series “101 Ways to deal with Food Cost” Energy Saving Tips

To view Part 9 in our series “101 Ways to deal with Food Cost” Menu, Recipes & Portion Control

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