Most people open restaurants because they're really good cooks. They either learned at their Grannie or Momma's knee, or they spent years working the line at someone else's place and they got pretty good at making stuff taste great. The idea of having a place where you can control the content of your menu, and the way it is served is an enticement many chefs and creative food people simply can't resist.
Then you open your place, and people love it! Life is grand. Your friends and family come by and have drinks (on the house, of course), tables are full. You are working 80 to a 100 hours a week, but who cares - you are the Master of Your Own Destiny!
Until about the seventh month when the bills are piling up, your staff is all sitting at the bar drinking and eating their way through the menu, and you haven't had a day off in... well, in seven months. Suddenly this destiny is nobody's dream.
Where did it all go wrong?
The very probable beginning to that answer is that you did not cost out your recipes. What does that even mean, and why is it so important?
Costing (as it's lovingly referred to) requires you to have a recipe for each of the items on your menu. 'Ah, but the recipe is in my head,' you say. That's probably a really good reason why you can't take a day off. If there are no recipes for your menu items, how do your cooks know how to make them? What is the standard they use when you aren't around? You simply can't be consistent in quality and control costs without a recipe.
'Ah, but then my cooks will steal my recipe and go to the competition,' you say. Okay, let's assume you are the next Escoffier, here's the reality of cooking: anybody can copy a recipe, but no one can copy the mind and creative spirit it came from. You got into this business to be a creative person, your body of work evolves over time. If you make a dish that is so amazing people want to steal it, I can guarantee you will make dozens more that are even better. Set your recipes free! And have your cooks sign a non-compete when you hire them... but that's for another post.
Here's the simple truth: if someone comes to your restaurant and gets your signature dish, and loves it; and then they come back a month later (when you're not there), and they order the same thing and it's completely different... they probably won't come back. What's worse, if they get sloppy service, or something else they don't like, they will probably snap a quick picture with their phone and upload it to Yelp, or some other review app on their mobile device, and you are headed down the rabbit hole of a negative online presence. Soon your reputation will be as a sloppy, operation that lacks discipline and consistency. You will be the chef that can't control their shit. All because you couldn't be bothered to write down your recipes and train your staff how to make them.
But that's just the first part of the issue. Even if you have written recipes, and your cooks are zealous about following them to the last detail, if you don't cost those recipes out, you have no idea if you are making money, or "paying the customer" every time someone orders from your menu. In later posts I'll talk about food cost, and understanding that in relationship to your overhead costs, but for now let's focus on the very first part of that: costing out recipes.
Here's the thing about costing... it sucks. It's time consuming, detailed work that takes a long time to do (unless you hire us to do it for you!), but IT'S THE ONLY WAY TO KNOW IF YOU ARE CHARGING ENOUGH TO MAKE A PROFIT. If you don't know what a dish costs to make, you cannot have any idea how much to charge for it. You are simply shooting arrows into the dark. You must know how much you are spending to know how much to charge. Period. End of Sentence. No debate. No "feelings." Nada. Cost your recipes, or you are going to fail as a resaurateur.
So, how do you do this? You can use this handy-dandy Excel spreadsheet:
(or you can hire us to do it for you... did I mention that?). Let's assume you want to save some sheckles and do it yourself. Let me walk you through the process and offer some hints for getting through this a bit faster.
1. You need to write down all your recipes using volume measurements. If you have figured out how to open a restaurant you need to figure out volume measurement in your recipes. This is not Nonna's kitchen... there are no cups and teaspoons here... we use weights and volume in teh big league.
2. You really need to buy a scale and have your cooks use it when they prep their stations (but this is really for another post on inventory control, so I won't go into that here).
3. Get your price list from every vendor you use. You need the most up to date list. Here's a hint: when you get these lists look at the unit you are buying things in. For example, say you buy onions in a 50 pound sack, and that costs $20. There are 16 ounces in a pound, so that 800 ounces of onions you bought there. Simple math, $20 divided by 800 means you spent .03 cents per ounce of onion.
4. Ha, not so fast! Let's not foget this thing called yield. You don't use all of an onion. You take off the root end, and the skin before you can cut it into a usable portion. So, the yield of your onion is probably about 98%. 'Wait a minute,' you say, 'how am I supposed to know what the yield is for everything I use?' Well, you can guess... or you can use The Book of Yields. Here's a link:
5. Now you are ready to open the spreadsheet and have at it. My recommendation to you is that you create a master set of spreadsheets with a different tab for each recipe. You will also have a bunch of sub recipes, but we'll talk about that in a later post.
6. Ah, let's have some fun! Once you have a different tab for each recipe, and you've filled in the recipe title you need to start by entering all the ingredients in the first column.
7. The next column is the AP Pack Cost - this is the As Purchased Package Cost that means how you bought it. So, for our onions, this would be $50.
8. The next column is Pack Size... in this case, 50.
9. And Unit Size would be pounds.
10. Remember I said there were 16 ounces in a pound? That goes in the next column: Unit Conversion. (And let me give you a little hint here... for staple items, like onions, you might as well go through every recipe you have and just copy and paste this information as you are going along. You'd be amazed how much time this saves!) And presto! The next column, AP Price, tells you how much each ounce of onions costs. Magical.
11. Don't forget our conversation about yield... that's the next column, and that will ultimately give you the EP Price, or edible portion price. That's the .03 cents you pay per ounce of onions.
12. You're almost there... don't give up! The Recipe Quantity is how much the recipe calls for, so maybe 1 or 2 ounces. And the final number is the EP Unit, in this case OZ, or ounces.
DONE! Almost! If you look at the top of the spreadsheet you'll see these open sells at the very tippy top:
Fill those is. In this case, I want a 33% food cost, and I want to sell this item for 9 bucks. Now, by the wonders of science you can look at the very bottom right corner of the spreadsheet and it will tell you the following:
It's costing you $3.60 to make this item. So, right now, if I am selling this on my menu for $9 I am literally giving the customer $1.62, because if I want to meet my 33% food cost I need to charge $10.62.
That right there is why you are struggling to pay your bills.
Say you sell maybe 20 quesadillas a night... times $1.62... that's $32 bucks and change you are literally giving away - in one night. $227 a week. $900 a month. ON ONE APPETIZER! Imagine what your entrees are doing to you.
'Oy, but no one is going to pay $11 bucks for a quesadilla,' you say. I hear you... and there are some ways to deal with that... and we'll chat about those in our next post!
Until next time... writing down your recipes, and go get yourself a nice scale while you're at it, I recommend this one: