Food Costs Make Restaurants Re-Think Labor Relationship
The restaurant and hospitality industry must go back to the basics when looking at menu items. Over the last few years, as labor costs were increasing, restaurants were moving to pre-prepped and packaged food items to reduce labor intensive preparation costs. Now, as food costs are escalating, the food service operator has to review every menu item.
Major food processors had introduced many products that were acceptable in quality and price to entice restaurant owners to move to prepared center of the plate items. Some notable examples were osso bucco, slow cooked meats like pulled pork and chicken, hearty soups and classics like stuffed peppers and cabbage rolls. All of these new products take long cooking hours and multiple steps. In the last few months processors and food wholesalers have combined to raise food costs to the point that operators must review each menu element to make certain ready to serve items make sense in light of the new pricing.
To evaluate a menu item, the restaurant must consider:
- Production time and cost.
- Quality of restaurant made item versus purchased item.
- Value to customer.
- Staff time available.
If the diner is getting an equal value, there is no reason to change. However, if the customer can get a better product, with a lower cost to the restaurateur, the decision is easy. Restaurant guests are looking for value and scrutinizing menus very closely with rising fuel costs and an economy that borders on recession. If you can make a menu item and hold your price without stressing your kitchen, this may be the alternative to prepared, fully cooked entrees and sides.
An example of the thought process may be a simple egg salad. You can purchase a relatively good, consistent ready to serve egg salad for about $4.50 to $5 per pound. A four ounce serving would cost about $1.18. To make this same item the cost for a ten pound batch may include food costs of $15.00 and labor of $10. That is $2.50 per pound. Eggs have almost doubled in price in the last year, but even with the high price of eggs, purchasing a pre-made item does not make sense; if your kitchen can produce a salad of equal quality without hiring additional personnel.
On the other hand, smoked pulled pork barbecue can be purchased for about $4.00 per pound. In your kitchen, to produce ten pounds, the food costs would be about $25 and labor would be $18 for an approximate total of $43 (includes waste from shrinkage of pork) or $4.30 per pound. There is also the issue of energy costs for the long term cooking process. Most restaurants cannot afford to produce this item in these quantities. However, there is still the quality issue that must be factored in the equation.
If your restaurant features pork barbecue as your main focus, you may be able to save a few dollars in larger preparation quantities and unique flavor profile may be important. The ready to serve barbecue may not fit your establishment even if it saved you money.
The thinking and evaluation process is not simple and a black and white decision. Take your time to make each decision. Make sure the customer’s expectations are first and your bottom line is a close second.
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