The Chef’s Guide to Conquering the Forty Thieves of Food Cost

Every chef knows the pressure: the delicate balance between culinary creativity and financial viability. A successful kitchen isn’t just about crafting mouth-watering dishes; it’s about mastering food cost management. If your food costs are in check, you’re on the path to success, but if they’re out of control, you could be facing serious problems. This isn’t just about pinching pennies; it’s about understanding where your money is going, and plugging those leaks. The “Forty Thieves of Food Cost,” first conceived in 1972, remains a relevant framework for identifying these potential pitfalls. Let’s dive into this updated version of the 40 Thieves and uncover how to safeguard your restaurant’s profitability.

Understanding the Core Issues: Where Do Food Costs Go Wrong?

Before we get into the specifics, it’s important to understand the breadth of the problem. Food costs aren’t just about buying ingredients; they encompass everything from purchasing to serving and even accounting. It’s a complex web of interconnected processes, any of which can throw your budget into disarray. Let’s break it down into key areas where costs can go sideways.

Purchasing: The First Line of Defense

The journey of your food costs starts with purchasing. This is where you set the tone for your budget. Here’s where things can go wrong:

• Overpaying: Are you relying on a limited number of vendors or failing to obtain bids for the best prices? A “no-bid system” can lead to inflated costs.
• Lack of Specifications: Without clear specifications for quality, weight, and type, you might end up with substandard products or inconsistent portions.
• Over-Purchasing: Ordering more than you need can lead to spoilage and unnecessary waste.
• No Budget: Operating without a purchasing budget is like navigating without a map; you’re likely to get lost.
• Invoice Errors: Failing to audit invoices and payments can leave you paying for things you didn’t receive.
• Too Many Vendors: Spreading your purchasing across too many vendors can make it difficult to negotiate favorable pricing.

Actionable Insights: Develop a robust purchasing system. Get multiple bids, create detailed specs for each item, and establish a clear budget. Regularly audit your invoices to catch discrepancies.

Receiving: The Gatekeeper of Quality and Quantity

Once your ingredients arrive, your receiving process needs to be airtight. Issues here can range from honest mistakes to outright theft. Watch out for:

• Theft: Dishonest receiving personnel can take items.
• Missing Credits: A lack of a system for issuing and tracking credits can mean you’re paying for returned items.
• Inaccurate Orders: Failing to verify the items received can result in being billed for products you didn’t get, or being billed for items not ordered.
• Weight Discrepancies: Invoiced weights that don’t match received weights mean you’re paying for products you never got.
• Improper Handling: Perishables left out of proper storage can spoil.
• Lack of Proper Equipment: Not having scales, for example, can make it hard to receive items correctly.

Actionable Insights: Implement a strict receiving protocol. Verify every order against the invoice, weigh items, and train staff to identify discrepancies. Make sure you have proper equipment for accurate receiving. Ensure perishables go directly into proper storage.

Storage: Keeping Your Inventory Safe and Sound

Proper storage is key to preserving the quality and lifespan of your ingredients, and controlling costs. Potential issues include:

• Improper Placement: Foods stored in the wrong places can spoil or be difficult to find.
• Wrong Temperatures: Incorrect temperatures and humidity can degrade product quality and lead to waste.
• Lack of Rotation: Not rotating stored goods means older products might go bad before you use them.
• Disorganization: Unorganized storage areas make it difficult to track inventory and lead to missed items.
• Lack of Accountability: Without a designated person responsible for food storage, things can quickly fall into disarray.
• Unsecured Areas: Open access to storage areas can lead to theft.
• Poor Inventory Control: Not recording or controlling the movement of food in and out of the storeroom can lead to discrepancies and waste.

Actionable Insights: Organize your storage areas and implement a FIFO (First In, First Out) system, regularly inspect storage areas, assign responsibility, and make sure storage areas are secure.

Preparation: Minimizing Waste and Maximizing Yield

How you prepare your food directly impacts your bottom line. Watch out for:

• Excessive Trimming: Over-trimming vegetables, seafood, and meats increases waste.
• Unchecked Yields: Not tracking raw yields means you won’t know if your portioning is off or if something is wrong.
• No Secondary Use: Failing to utilize trim items for stocks, soups, or other dishes means you’re wasting valuable ingredients.

Actionable Insights: Train your staff on proper trimming techniques, track your raw yields, and find creative ways to use trim items.

Production: The Heart of the Kitchen

Production is where your food comes to life, but it can also be a source of major cost problems. Common issues include:

• Overproduction: Making too much food leads to waste and spoilage.
• Incorrect Cooking Methods: Using the wrong cooking method can affect yield and quality.
• Incorrect Temperatures: Cooking at the wrong temperature can lead to shrinkage and quality issues.
• Poor Batch Firing: Cooking or holding food for too long degrades quality.
• No Schedules or Prep Sheets: A lack of standardized processes can lead to mistakes.
• Not Using Standard Recipes: Inconsistent recipes result in unpredictable costs and portions.
• No Waste Log: Not tracking wasted items makes it difficult to identify problems.

Actionable Insights: Implement production schedules and prep sheets, ensure staff uses standardized recipes, use batch firing, and track wasted items, and use correct cooking methods and temperatures.

Service: Delivering Value and Minimizing Loss

The way food is served has a direct impact on costs. Service-related issues include:

• Inconsistent Portion Sizes: Without standard portion sizes, food costs can quickly spiral out of control.
• No Standard Utensils: Inconsistent serving utensils can lead to incorrect portions.
• Lack of Production Records: Without production records, you can’t track trends or manage inventory effectively.
• Carelessness: Spillage, waste, cold food, and re-fires all contribute to increased costs.
• Poor Planning: Inadequate planning during transitions from busy to slow periods can result in waste.
• Inadequate Ticket Control: A poorly trained “wheelman” can cause delays and mistakes in service.

Actionable Insights: Establish clear portion sizes, use standard serving utensils, maintain accurate production records, provide training to minimize errors, and manage transitions carefully.

Sales: Maximizing Revenue and Tracking Comps

Your sales process is another critical area for managing food costs. Watch for these issues:

• Unrecorded Sales: “No charge” items or cash not being turned in is lost revenue.
• Unauthorized Comps: “Open food” abuses or unauthorized comps to friends and family means lost revenue.
• Untracked Comps: Not tracking “comps” and giveaways makes it difficult to understand where money is going.
• Untracked Errors: Not tracking re-fires or waitstaff/cook errors is an indicator that something is wrong.
• Poor Pricing: Incorrect menu pricing will result in loss of revenue or lost customers.
• Incorrect POS System: Incorrect pricing keyed into your register system will affect your revenue.
• Poor Sales Mix: If most customers are ordering low-margin items it will affect your revenue.
• Employee Meals: Employee meals that are overproduced or unauthorized will increase food costs.
• Not Using Overproduced Items: Not running specials on overproduced items results in waste and lost revenue.
• No Credit for Marketing: Not giving credit to marketing events will impact financial performance.

Actionable Insights: Implement a strict sales tracking system, minimize comps, and ensure accurate pricing on your menu and in your POS system. Monitor sales mix to optimize profitability and use marketing to move overproduced items.

Inventory: Counting Accurately and Understanding Value

Inventory management is crucial for accurate cost tracking. Issues to address include:

• Counting Errors: Using a “Sheet-to-Shelf” counting method instead of “Shelf-to-Sheet” means counting what you believe you should have rather than what is actually present.
• Not Using Discontinued Items: Failing to use discontinued menu products before they expire will result in loss.
• Miscalculations: Miscalculations in your inventory program, like entering cases as pounds will create errors.
• Zero Dollar Values: Failing to assign a dollar value to inventory items will result in inaccurate reports.
• Missing Items: Items not being counted, especially new or “out of sight” products will cause inaccurate reports.
• Out of Date Pricing: Outdated pricing on your inventory calculation software results in errors.
• Not Verifying Data: Not verifying the accounting data before final posting causes inaccuracies.

Actionable Insights: Use the Shelf-to-Sheet method for inventory, make sure to use discontinued items, and verify the data in your system.

Accounting: Ensuring Accuracy and Avoiding Misclassification

The accounting system is the final layer of scrutiny. Errors here can skew your entire financial picture. Look out for:

• Unverified Ledgers: Chefs need to verify the general ledger to catch errors.
• Misclassified Costs: Charging paper or equipment products against your food cost of goods is a common mistake.
• Inter-Venue Errors: Charging products from other venues against your account can lead to inaccuracies.
• Incorrect Transfers: Transfers and credits not processed correctly can cause problems.
• Inventory Errors: Incorrect cost extensions on your inventory will result in errors.
• Zero Values: Items with zero dollar value should be investigated.
• Outdated Pricing: Not checking if pricing is up to date on key proteins results in errors.

Actionable Insights: Chefs should regularly review their general ledger, ensure accurate cost classification, and check inventory data regularly, especially the cost extensions. Verify your pricing on proteins and new items.

The Importance of Sales Mix

It’s crucial to understand that a high food cost doesn’t always equal a problem. Your sales mix – what your customers are actually buying – is a key factor. For example, you might sell more high-cost, high-margin items. This could mean a higher overall food cost, but more revenue coming to the bottom line.

Actionable Insights: Analyze your sales mix to understand which items are driving your food costs. It could be that your customers are buying more expensive items which is okay as long as you are earning more profit.

When to Throw in the Towel

Sometimes, despite your best efforts, you can’t achieve your budgeted food costs. This is a sign that the problem isn’t in the kitchen; it’s in the budgeting process. If you’ve addressed all the “forty thieves,” verified your sales mix, and reviewed your accounting system, but still cannot meet the budgeted food costs, it might be time to look for another job. Some companies simply set unrealistic budgets based on what they want to earn, not what is actually achievable. Unrealistic goals can harm morale more than the fractional cost savings they’re trying to achieve.

Actionable Insights: Be realistic about your budgets. If your company is setting impossible targets, consider moving on to a place that has realistic, achievable goals.

Take Control of Your Food Costs

Managing food cost is a complex, multi-faceted challenge that requires attention to detail. By understanding the forty thieves and implementing robust systems to address them, you can get control of your costs and protect the financial viability of your business. From purchasing to accounting, every step in the process matters. Take the time to analyze your systems, train your staff, and implement the necessary changes. Your bottom line will thank you.