How to reach your restaurant’s target prime cost

 In 1. David Scott Peters, budget, Food Costs, Labor, Menu, The Numbers

In this post I explained what makes up your prime cost and why it’s so important. I also revealed to you that your restaurant’s target prime cost should be 55 percent, in most styles of restaurants. There are exceptions and it will be harder in some restaurant styles, but these days, your best bet for survival is to aim as close as you can for this 55 percent.

But how do you get to it? Let me tell you.

No matter how impossible you think it is, there is a way, and I have members achieving it over and over again.

Budget Purchasing: Using our purchase allotment system, every member I have talked to — and I mean every member — has reduced their food purchase and their inventory almost overnight. A side effect is a reduction in food cost because cooks are taking better care of what is on the shelf because there is less to grab from on the shelves and because you are just simply paying attention.

Prime Vendor Agreement: Promising to purchase 90 percent of your products from one distributor will almost always save you 3, 5, even 7 percent. Many of my members use a distribution consultant to aid in getting them the best deal. (If you want the phone number for my guy, just pick up the phone and call me. I will be more than happy to help.)

Analysis: Using our Menu Profit Generator Software, restaurants have been seeing a minimum of a 3 percent reduction in food cost. It has allowed them to strategize what prices they raise, what products they need to purchase smarter, what items to drop and most importantly, helped them engineer their menus for profitability.

Budget Labor: Using our labor allotment system, members have seen a minimum reduction in labor cost of at least 1 percent and many as high as 10 percent. It’s much easier to hit a target when you have one, and it’s that much easier when you’ve spelled out for your managers how much money they have to spend, how many FTEs (full-time equivalents) and how many hours they have to schedule each and every schedule in order to stay within your budgeted targets.

Tracking: Tracking labor on a daily basis enables management to make small changes on a daily basis to stay on budget.

Training: Implementing one or both of our training systems, Full Service- or Quick Service Restaurant Training Templates and SMART Restaurant Operations Manual and Management Training Program, our members see reduced labor costs due to lower turnover and increased sales due to happy guests.

While the list goes on, these are actionable systems you can implement today and will be on your way to a 55 percent prime cost. What is really incredible is they work for any restaurant, no matter what kind of service or food you serve.

What are you waiting for? TAKE ACTION! And get your prime cost to 55 percent.


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