How Food Waste Is Eating Away Your Profit Margin – And The Simple Steps To Fix It

Business Tips

As a business owner, there is no chance you’d ignore your balance sheet, throw away your bank statements, now know how much money is in your account, or guess whether you have enough to cover your expenses. You just don’t leave these things up to chance.

So it begs the question, why do so many restaurant owners have the faintest clue about how much food they’re using versus how much gets thrown out?

In a restaurant or cafe, food may as well be money. Food supplies consistently show up as one of the highest operating costs. And what customers pay for their food is what will end up being your profit.

As a restaurant owner, It’s just as important to track food usage and waste as it is to track your finances. Research from the Australian Bureau of Statistics shows that catering and food service businesses pay between 25 – 37% of their total expenses on buying the food and beverages they sell. This is a huge percentage of total expenditure. If even more than a third of your total money spent is on food, then taking steps to reduce what is wasted could see your profits soar.

There’s a good chance you are wasting more food than you should. Fortunately, there are simple ways you can cut down on that waste. Here’s the rundown.

The Two Kinds Of Restaurant Waste

There are two kinds of food waste in the food industry, and one affects your bottom line more than the other.

Pre-consumer waste is the food that is wasted before it gets to the customer. Think kitchen scraps and food that had gone bad from non-use. Post-consumer waste is everything that’s wasted after it reaches the customer, like leftovers that get thrown out.

Which one hurts you the most financially? Easily pre-consumer waste. With post-consumer waste, you at least have the advantage of knowing that food was wasted after it had been paid for by the customer.

You need to focus your attention on pre-consumer waste, delaying efforts to cut back on this type of waste is basically like having money fall straight your of your wallet into the rubbish bin.

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: Implement A System To Accurately Predict Your Needs

The crux of being able to efficiently reduce food wastage is having the ability to accurately forecast your customer numbers and food supply needs.

Here are some questions to ask:

  • 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?

You’d be surprised to find out that most restaurants are simply guessing these numbers. And nothing leads to unnecessary food wastage more than blind guesses and speculation.

Nope. You need to start recording everything. 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?

Soon you’ll begin to see patterns emerge, and they will help you to make accurate predictions about how many guests you’ll have at any given time and what they are likely to order. This type of data is a goldmine in helping you know exactly what and how much to prep.

Step 2: Perform An Audit On Your Food Waste

Next, you need to get an idea of what your venue’s daily waste actually looks like. There are many ways you can achieve this. You can create a team from your own staff to organise and track your waste. Or you can outsource it to an outsider. Either way, someone needs to be in charge.

Then, get sorting. Put food scraps in one bin, spoiled food in another, and post-consumer food waste in it’s own too. From here you can start to get an idea of how much waste you’re producing and how. It will give you a visual cue to assess 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.

It’s at this point, also, that you should make your entire staff is across this new initiative. They need to know the ‘why’ behind the switch (it will save money and be better for the success of the restaurant). If everyone isn’t doing their part, the results won’t be accurate.

Step 3: Make The Most Of What You’ve Got

Your audits around your food wastage should help you see whether the food supplies you keep on hand in your pantry are too much, not enough, or just right. If you find you are discarding food that is spoilt in storage, it’s time to change your order and buy less. Make sure you’re keeping your food supplies in the right containers at the right temperature and outside of the danger zone (5°C – 60°C). 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 Keep 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: Stick To HACCP guidelines

If you’re in the food and beverage industry you already know about the Hazardous Analysis and Critical Control Points guidelines. HACCP is designed to reduce hazards in food production by setting safety standards to maintain. Bust most restaurant owners don’t know that following them can help minimise food waste. For example, if you stick to HACCP guidelines on food temperatures, it safeguards against the risk of having to toss food that is dangerous to consume. And less waste, is less money in the trash.

Step 6: Schedule regular check-ins

Preventing food waste that loses your restaurant money isn’t a one-time project. You should check in with more waste audits and meetings with staff to make sure all your new waste-prevention procedures are being taken and followed. Preventing food waste is a constant process, so make check-ins a part of your restaurant management routine.

How Do You Reduce Post-Consumer Waste?

While pre-consumer waste constitutes the bulk of cash loss in the food industry, preventing post-consumer waste can still help improve your profit margin. Here are some ways to cut down on post-consumer waste:

  • 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.

Contrary to popular belief, you don’t need to make huge adjustments to the way you run your restaurant to reduce your food wastage. And as soon as you see the impact on your impacts, you’ll have all the motivation you need to make good food wastage habits a priority in your venue.


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