5 Tips How to Reduce Food Cost in Restaurant Management

As a restaurant manager or owner, you should always be on the lookout and open to ways to reduce food costs in your restaurant. No matter what kind of restaurant you own, with tight margins, you need to leverage every tool possible to make sure you’re getting the most profit out of your business. So what are some of the ways you can reduce food costs in restaurant management? Today, we’re going to explore the various ways you can use restaurant software to cut your food cost.

Old school restaurant owners remember the days of using expletives and spreadsheets to budget and calculate food costs. I’m sorry, but if you’re still of that generation, then you’re probably spending more time and effort than necessary.

Not only that, but you’re missing out on other opportunities to save your business money. Why create more work for yourself, when there are ways to automate your restaurant POS software that is designed to take the workload off of restaurant managers and owners. You have more important things to do like running and growing your restaurant.

Restaurant Software Saves You Time and Money

As much as you’d like to think that the food cost calculation spreadsheet you found off the internet is fantastic, it only costs you time and money. It’s way more complicated these days to keep up with a spreadsheet than it is to utilize restaurant software that can automate the process. In restaurant lingo, that helps you to manage your front and back of the house and be more efficient.

If you own a computer and have the time and technical prowess to mess with a spreadsheet, then you can use the latest software on the market for restaurants. They’re not all as hard and scary to use as they may seem, and you’ll enjoy the fact that you don’t have to manually update a spreadsheet every time there is a price change on your inventory. Talk about wasting time.

So let’s get to the point. To cut food cost-efficiently and effectively, you need to utilize a restaurant management software solution.

Here are five ways to reduce food costs in restaurant management with software:

1. Know your recipe cost and sales data

You can reduce your food cost by knowing the recipe cost and by analyzing data from your back-office or cloud-based software. For instance, it may cost $1.50 to make a burger and fries, and you sell the meal at $5.00. The software will tell you that your food cost percentage is 30%, but you want an ideal of 25%.

With this data, you’ll be better equipped to determine if you need to raise or lower your prices to cover overhead costs. You’ll also have the ability to change the menu prices or types of ingredients you use if the prices fluctuate. So you’ll always have the performance data you need for each menu item to adjust for any escalating costs.

2. Budgeting is where it’s at

Another way to cut food costs in restaurants is to allow the software to help you with budgeting. By looking at your actual invoices and sales data, and by performing some forecasting, you can adequately budget with real-life data. Then you can find and fix any problems that are throwing you off-budget, and order only what you need from your food products supplier to keep you within budget.

3. Set your par levels

Another cost reduction strategy is to set your par levels and low-level alerts in your software. Par is the level set to which the product is replenished. You can set a low-level alert benchmark to notify the manager that an inventory item needs to be replaced.

By establishing a par level, you’ll always know exactly how much product you need to order, help keep you on a budget, and reduce food waste. And with a low-level alert, the manager will never miss an order again.

4. Accurate inventory

There’s no easier way to reduce your food cost than by keeping an accurate inventory of your products. The software helps to drive this ability to reduce your inventory count each time an item is purchased.

You most likely will have to invest time into setting up your initial inventory counts, but most software systems allow “invoice importing” that replenishes your inventory to keep it accurate. Combined with your par ordering levels, you’ll have a well-oiled inventory machine in no time.

5. Prevent the theft of items

Having an audit trail of every sale makes all the difference when it comes to preventing the theft of food items. Order voids and removing items from orders can all be tracked from the software. You can also set up reporting to keep track of your high-ticket items, so they match inventory.

If you’re off on your numbers, then you’ll have data to help track down the problem. Was it waste or did it walk out the door? Your software will help prevent theft when configured and managed correctly.


These are just five ways to help reduce food costs for a restaurant with software. Reducing food costs is only one of the main advantages you’ll see when deploying a restaurant management system. You’ve learned that you can control your food costs, monitor your inventory, set par levels, budget your purchases, and prevent theft of products.

All of these features help you facilitate the changes in your business to be proactive when it comes to resolving problems. If you need restaurant software to help cut food costs and aren’t sure what kind to get, you can compare restaurant POS systems here.

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