June 19, 2025
The scent of a busy kitchen, the smiles of satisfied customers — these are the goals of every restaurant owner. However, behind the scenes, there is an ongoing challenge: managing food costs. Food costs aren't just another item on your to-do list; they're crucial to your restaurant's success.
According to the National Restaurant Association, food costs typically account for about 28% to 35% of a restaurant's revenue. It means even small changes in how you handle food sourcing, inventory, and menu pricing can lead to significant gains or losses in your bottom line.
But here's the good news: You don't have to handle this challenge blindly.
This blog guides you through 12 proven, actionable strategies to help you seize control of your food costs, optimize your entire operation, and significantly boost your profitability.
Let's begin by understanding the core components of food cost management. The first step is to break down the costs involved and how you can track them effectively.
Understanding the various types of food costs is crucial for effective management. Food costs in restaurants typically fall into two categories: direct and indirect.
By identifying where your money is going, you can make informed decisions about your purchases, portions, and menu design.
Calculating your food cost percentage is a simple yet effective way to understand your profit margins. This percentage is the ratio of your food costs to your total sales.
Ideally, your food cost percentage should fall between 28% and 35%, but this can vary depending on the type of restaurant.
Formula:
Food Cost Percentage = (Total Food Cost / Total Sales) X 100
Tracking this regularly will allow you to assess whether you're on target or need to adjust your pricing or menu.
iOrders' analytics tools enable you to track food cost trends over time, allowing you to identify discrepancies early and make adjustments accordingly.
Now, let's discuss strategies that can help you control your food costs.
Controlling food costs is an ongoing challenge for every restaurant owner, but with the right strategies, it's entirely possible to turn it into an opportunity for increased profitability.
Here are 12 actionable strategies you can implement to effectively manage food costs while optimizing your operations.
Menu engineering is all about designing a menu that maximizes profitability and efficiency. It's important to analyze the popularity and profitability of each item on your menu and then strategically adjust your pricing or placement based on this data.
Standardizing your recipes ensures consistency in portion sizes and ingredient usage, which helps prevent unnecessary waste and over-purchasing.
Portion control is a major factor in minimizing food costs. Over-serving leads to waste, which directly impacts your bottom line.
Building strong relationships with suppliers and diversifying your sources can help reduce food costs through competitive pricing, discounts, and reliable delivery.
Sourcing local and seasonal ingredients can save you money and provide your customers with fresher, more flavorful dishes.
Proper inventory management is crucial for minimizing food waste and ensuring that you never run out of stock or overorder.
Utilizing data analytics and accurate forecasting can significantly reduce food costs by enabling informed decisions about inventory, purchasing, and menu pricing.
Reducing kitchen waste is essential for controlling food costs. By repurposing ingredients, you can ensure that nothing goes to waste and maximize the use of all your resources.
Energy costs can significantly add to your overall food costs. Investing in energy-efficient kitchen equipment and maintaining it regularly can help you save money over time.
Regular staff training ensures that everyone in your restaurant understands how food costs impact the business and knows how to contribute to minimizing waste.
Automating processes can save both time and money, reducing human error and improving efficiency across various areas of the restaurant.
Upselling and offering combo deals can significantly boost your revenue without increasing food costs. By strategically bundling high-margin items, you encourage customers to spend more while increasing profitability.
Now that you have a comprehensive list of proven strategies to control food costs, it's time to explore how iOrders can specifically help you implement these strategies.
Managing food costs involves both strategic planning and utilizing the right tools to stay on track. Nowadays, technology has become an invaluable asset in cost management.
iOrders offers a range of services designed to streamline operations, optimize food costs, and ultimately increase your profitability.
Let's explore how iOrders can help reduce food costs in your restaurant directly.
When you integrate your POS with iOrders' online ordering system, it enables you to track ingredient usage in real time, helping prevent overstocking and waste. It allows you to adjust orders based on actual sales trends, which directly reduces excess costs.
Third-party delivery services can account for up to 30% of your revenue, eroding your margins and increasing your food costs.
By switching to iOrders' commission-free online ordering system, you can retain more of the money you earn from each order, allowing you to reinvest in your business.
With the iOrders Website and QR code ordering system, your customers can customize their orders directly from their phones, giving them control over portion sizes and helping your restaurant reduce waste.
iOrders' smart campaigns allow you to send targeted promotions to customers, highlighting higher-margin or seasonal items. It boosts sales of profitable menu items and reduces waste by encouraging customers to order dishes that utilize excess ingredients.
iOrders' AI-powered review system provides real-time feedback from customers, helping you make data-driven decisions to improve food quality, portion sizes, and reduce food waste.
As we've seen, technology plays a vital role in controlling food costs. Let's wrap up our discussion and explore how implementing these strategies can help you stay on top of food cost management.
Controlling food costs requires effort, smart strategies, and effective tools. By analyzing costs, optimizing inventory, and using technology, you can minimize waste and enhance profitability. Continuously assess processes, adapt to trends, and make decisions that drive efficiency and savings.
Implementing the strategies discussed in this article will not only help you manage your food costs more effectively but also enhance the overall customer experience. iOrders provides the tools you need to streamline your operations and manage your food costs effectively.
Take the first step towards better food cost management today. Contact iOrders and see how we can help you run a more efficient, profitable restaurant.
