Restaurants: How to Manage Rising Food Costs | McEvoy Lelievre & Associates

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Restaurants: How to Manage Rising Food Costs

Canadian restaurant owners are feeling frustrated as they work hard to make a profit under the pressure of rising food costs.

In a recent industry survey, 70% of restaurant owners say that the soaring food costs are a real concern, which is up from 10% reported only a year ago.

The scarcity of some food, due to weather patterns causing damage to crops and livestock, and the costs of producing the food is a large part of the reason for the increase in costs.   Add that to the drop in the value of the Canadian dollar, increase in wage expenses, an economy that is still trying to bounce back, and now the introduction of the Cap and Trade Tax, the cost of food is a real challenge for Ontario restaurant owners’ bottom line.

Raising menu costs is always a last resort.  In downtown areas like Hamilton, St. Catharines and Niagara Falls, there is a wide selection of eating venues, which means a lot of competition.  Providing quality food at a reasonable price is essential to winning the patronage of the savvy diner who is managing their personal food budget.

Tips to Keep Costs down Despite Rising Food Costs

  • Be Creative – It is time to think ‘outside the box’.  Just because you’ve been doing something the same way for years doesn’t mean it is going to be the best way to do it moving forward.  Times have changed, and the cost of food is proof that this is true.  Engage your staff!  They may offer you ideas you never thought of before.  Offering them a chance to be a part of the solution will encourage ownership and adoption of the plan, which will increase the likelihood of success.
  • Be Adaptable – Any idea you have, write it down, but don’t put it in stone.  Set a reasonable time for evaluation, and then be willing to change it as needed.
  • Pay attention to the Details – “Watch your pennies and the dollars take care of themselves… or in today’s era, watch your loonies.”  Look at all costs of your business.  Sometimes we get so busy as business owners that we let the small things slide, but those small costs add up.

Some cost saving ideas to consider

Buy Local

With the high cost of buying imported food from the U.S., and the cost of shipping, there are financial benefits to buying local.  Selling food that grows, is raised, or produced close to home offers a competitive advantage in that many patrons like to eat local food.  It is understood by many that eating food produced close to where it is served, is a more nutritious and environmentally-friendly option.  And, they feel good that they are supporting the local economy.  In the agriculturally rich community here in Niagara and Hamilton, offering local food is not difficult and often expected by local patrons and tourists.

Menu inspired by Savings

Change up the menu!  Whether it is because you decided to source more of the ingredients for your dishes locally, or you created a new menu that will help reduce waste, this is the time to shine.  Give your chefs a challenge to not only create tasty entrees, appetizers, and desserts but inspire them to take on the extra challenge of cost savings.  Cost savings come in many ways; maybe you don’t have to refrigerate the food, or maybe you can pick up the food by walking to the local market, or possibly the overall cost of a new dish is less than one that is currently on the menu, or have a dish with no waste.  Whatever it is, have fun with it, and make sure to track your savings so you can all celebrate your successes.

Manage Food Waste and Streamline Operations

Food that is spoiled, damaged, or is not able to be served in the restaurant should be counted, weighed, and value put on it that can go towards a tax deduction. If the food is still good to eat, consider contacting a local outreach program, or Food Bank to see if they can use it.  Ontario restaurants are protected under the Donation of Food Act, 1994.  Even though there are savings through tax deductions, the most cost savings are found by reducing food waste.

Also, look to improve operations:  Track sales trends, review inventory, and evaluate management procedures, to see other ways you can reduce food costs.

These are a few ideas on how restaurant owners can save money to offset some of the rising food costs.  Once you have a baseline evaluation of your operation, consult with your accountant and bookkeeper to help streamline operations.  They can assist in helping find ways for you to save money to minimize the impact of rising food costs.


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