Food and labor costs are the most highly monitored expense line items on the P&L. Labor is heavily impacted by managing overtime of your employees and making sure you accurately staff each shift. Labor management is a topic for another post. Today we are focusing on food costs, a much harder cost to manage. Each period we produce over 85 Profit & Loss (P&L) statements for our Client’s, primarily Domino’s franchisee companies. We judge food based on the percent of Total Revenue. For example, if your Total Revenue was $100,000 for the period and Cost of Food was $30,000, you would be running a 30% food.
We interviewed several of our clientele's best food cost runners across the country to compile the below best practices list:
1. Employee Training
- To the extent possible, we recommend teaching classes specifically on food portioning. If you notice a store is trending in a negative direction with food waste, go to that store and teach the team a food portion class with scales. It is important to train, and retrain the eye to the correct amounts to be placed on the product and eliminate waste. During the classes you can usually identify and correct bad habits.
- Weigh in sheets for the start of each shift. Prepare three different types of pizzas. Weigh after each step. This “warms” the eye up to the perfect ratios.
- Properly date fridge items to maintain the proper flow of product through the fridge and manage spoilage.
- Attach a big portion of the Manager's bonuses that is based on food variance. Example: If actual food is 0.2% over the ideal they will lose 30% of their total bonus. Don’t reward food “saved” in order to make sure the manager’s are not saving too much by not putting enough toppings on the product.
- Zero theft! Theft will run up food costs. Theft includes discounting and zeroing out orders.
Scales on the makeline will encourage team members to measure food throughout their shift. It is important to train the eye periodically in order to make the perfect pie.
Catch bins under makeline racks
Catch excess toppings that fall off pizzas to avoid unnecessary waste. A little waste over time adds up to a big loss.
3. Food Orders
- To the extent possible, do all the food orders yourself. It takes about 5 minutes per store per order.
- One client said, “I believe if we let GMs and AMs do the food orders there is a lot of waste before starting the battle. Some stores may have three or more people doing the orders. Also, one person can detect trends and will know if there is any funny stuff going on. I think this saves me 1% in food cost.”
- Constant monitoring and follow up. Have the closers do a partial inventory count nightly and monitor the variances.
5. Honor Domino’s Specials, but Don’t Promote Them.
- Work on your store’s website to push corporate specials down to the bottom.
- Promote your specials and revenue makers. Avoid any high food cost offers if possible
- Push higher price point coupons
6. Delivery Charge - Largest Impact!
- Do not be afraid to raise your delivery fee.
- HNOA insurance is expensive.
- The delivery fee is additional profit that is factored in to lowering food cost %.
- Example: Simple raise of $.50 delivery on 1,000 orders is $500 additional dollars at $0 product cost. Extrapolate from there.
Minimizing food waste, monitoring food costs, adjusting specials, and competitively increasing delivery charges will help lower your food costs and increase your Domino’s franchises profit.