Restaurant Food Waste is Killing Your Profit Margin—Here's How to Fix It
Imagine this: You’re running a business, but you don’t balance your books, and you throw away bank statements without opening them. You don’t know how much money you have in the bank. You just “guesstimate,” and hope there’s enough in your accounts to cover your expenses.
Yikes. You don’t even need to be a business owner or manager to know what a terrible idea that is.
So why do so many restaurateurs have no idea how much food they’re using versus how much they’re wasting?
After all, in a restaurant, food may as well be money. Food supplies are one of the highest costs for a restaurant. And what customers pay for their food is what will end up being your profit.
So just like it’s important to track your finances, when you run a restaurant, it’s important to track your food usage and waste. According to Restaurant Hospitality, industry waste amounts to a cost of around $25 billion every year. Working to prevent food waste can cut an individual restaurant’s costs by 2 to 6 percent.
Chances are, you’re wasting more food than you should. Luckily, there are ways you can cut down on that waste, which means big savings. Here’s what you need to know.
The two kinds of restaurant waste
First, let’s talk about the two different kinds of restaurant waste, and which one is likely having the bigger effect on your bottom line.
Most food waste can be split into two categories: Pre-consumer waste, and post-consumer waste. Pre-consumer waste is every bit of food that’s wasted before it gets to the customer. Think things like kitchen scraps and spoiled product. Post-consumer waste is everything that’s wasted after it reaches the customer, like leftovers that get thrown out.
Know which one is probably hurting your restaurant’s finances the most? It’s not post-consumer waste, since that’s food that’s wasted after it’s been bought and paid for by a guest.
Pre-consumer waste is where you need to focus your efforts on cutting back, because food that’s wasted before a customer can pay for it is like money that’s falling out of your wallet.
So what can you do to cut down on pre-consumer waste? How can you prevent that financial loss as much as possible? Here are some steps that you can implement in your restaurant today.
Step 1: Create a system to accurately predict your needs
Before you can get started, you need to establish a system for forecasting your customer numbers and food supply needs.
Do you know how many customers will be coming through your doors on any given day?
Do you know how much food you need to purchase in every supply order?
Do you know how much you need to prep to be ready for the orders you’re likely to receive during each meal service?
Many restaurants are just winging all these numbers. And that’s a recipe for wasted food and wasted money.
Your first step toward reducing waste is collecting as much data as possible. Record everything you can think of:
How many customers walk through the door each hour?
How many of each menu item is ordered each day?
Are there any menu items that are rarely, if ever, ordered?
Over time, as you compile this data, you’ll see patterns start to emerge. Those patterns will allow you to make accurate predictions about how many guests you’ll seat and what they’re likely to order, which translates to you knowing exactly what and how much to prep.
Step 2: Conduct a waste audit
The next step is to get a picture of what you’re restaurant’s daily waste looks like. There are a lot of different ways you can do this. You can create a team from your own staff to analyze your waste. Or you can hire an outside firm to do it. Just make sure someone is in charge.
Then, start sorting your waste. Place food scraps from prep work in one trash can. Put spoiled food in another. Put post-consumer waste in a third. This will give you an idea of how much waste you’re producing and how. It will also allow you to visualize your waste. For example, if cooks are tasked with throwing away burned food in one specific location, they’ll have to see how much their mistakes are costing the restaurant. Just that visualization might be enough to motivate staff to be more careful about what they waste. At the very least, it will make them aware.
This is also the point in the process where you should make sure your entire staff is on board with your mission to cut down on waste. Make sure everyone understands why this is necessary (because it will save money and ultimately be better for the success of the restaurant). If everyone isn’t doing their part during your waste audit, the results won’t be accurate.
Step 3: Make the most of your inventory
Your waste audit should help you see whether the food supplies you keep on hand in your inventory are too much, too little or just enough. If you find you’re throwing out food that spoils in storage, tweak your ordering and buy less. Evaluate your storage practices to make sure you’re keeping ingredients at the right temperatures and in the right containers. Find ways to repurpose ingredients, like using scraps and bones to make homemade stock, or turning stale bread into croutons.
Step 4: Create recipes and stick to them
Create written recipes for all the dishes on your menu, and then ensure your cooks are sticking to them. If they measure out ingredients and keep recipes consistent, you’ll know exactly what goes into a dish — and how much of it. This will make keeping the right quantities of ingredients on hand much simpler.
Step 5: HACCP guidelines
People in the restaurant industry already know about Hazardous Analysis and Critical Control Points guidelines. The HACCP is meant to reduce hazards in food production by setting safety standards. But did you know that revisiting how stringently you follow them can help you cut down on food waste? For example, if you’re careful to stick to all of the HACCP rules about keeping foods at the right temperatures, it ensures you never have to toss food because of a mistake that might make it dangerous for diners to consume. That means less waste, and more money in your pocket.
Step 6: Schedule regular check-ins
Preventing food waste that loses your restaurant money isn’t a one-and-done process. You should check in regularly with more waste audits and meetings with staff to make sure all your new waste-prevention procedures are being taken seriously and followed. Preventing food waste is a constant process, so make check-ins a part of your restaurant management routine.
What about post-consumer waste?
Pre-consumer waste is where the bulk of your cash loss may be, but preventing post-consumer loss can still help your profit margin. A few ways you can cut down on post-consumer waste are:
Manage your portion sizes. If you find that guests consistently don’t finish a dish, make the portions smaller.
Encourage your guests to take uneaten food home and have containers on hand for them to do so.
Train your staff to thoroughly understand the menu. This way they can manage expectations about dishes and cut down on meals being sent back because they weren’t what the customer wanted or expected.
Audit your menu. Remove any items that don’t sell well.
Make sure your menu isn’t a novel. Having too many options will lead to needing several different ingredients. Keep your menu simple; it will make your dishes more consistent and reduce your overall waste.
With the right plan, it doesn’t need to be a huge adjustment for your restaurant to stop wasting food. And once your profits start to reflect the changes, you’ll have all the motivation you need to make waste prevention a regular priority at your eatery.