Restaurant COGS: 3 Reasons You Should Be Focusing on It

restaurant cogs - pay less, earn more

You always hear about ways to “Get Rich Quick” in your restaurant.

You get emails hawking products that cost thousands. But they maybe save you hundreds.

So, when it comes to running a restaurant, making more money isn’t about a flip of the switch.

It’s about paying attention. Making smarter decisions. Or even using technology that saves you way more than it costs you.

You want to be more profitable, but there are so many different ways to do it. And with so much going on in your restaurant every day, it can be difficult to know where to start.

What’s right or wrong? What’s a complete and utter waste of time?

No one’s really been clear. So we figured we would be.

We’ve got the 3 Best Ways for you to Pay Less Money and Earn More Profits for your Restaurant.

Now, you’ll know exactly how to change your restaurant for the better.

And earn some extra cash, too.

1: Understand your Restaurant COGS

You hear about your cost of goods sold all the time.

Maybe you calculate it once in a blue moon. Or maybe you’ve never figured it out.

But, it’s vital to your restaurant. And not knowing it is, frankly, stupid.

Your Cost of Goods Sold is the key to managing your restaurant’s profitability.

If it’s too high, you know your food costs are out of control. And you can start the process to lower them.

With your COGS in hand, you can determine where you’re paying too much for ingredients. Or if you’re over ordering.

How do you calculate your COGS? Well, we could write an entire blog post on it.

And we did. Twice.

But, the basics…

You’ll need to do an inventory count, and you’ll need to do it two times. You’ll then enter those numbers into an equation with your purchases.

The result? The number you need.

But, it’s important to note that those inventory counts can’t be halfway done.

No fudging numbers just so you can sneak out of the freezer sooner. No eyeballing and guesstimating how much fresh produce you have left.

Only accurate numbers yield accurate results. And making changes to your restaurant on inaccurate results can lead to bigger problems than what you started with.

Does this all sound time-consuming? You’d be right.

And you’ve got too many employees with surprise “dead grandparents” that you suddenly have to cover for to put all your focus on your counts.

Luckily, there’s restaurant technology out there that helps eliminate taking inventory.

And there’s even one that calculates your COGS for you.

2: Build a Budget

When things get busy, it’s easy to let the focus on your restaurant COGS fall by the wayside.

But your accountant isn’t going to let you forget how important your numbers are.

With a comprehensive, weekly restaurant budget, you’ll always have something to measure your spend against.

That’s not to say you make a budget once and then forget about it.

It takes a process. And some meetings each week.

But, that small boost in your time (which can be avoided with the right technology, anyway) will also mean a boost in profits.

Your weekly budget – if done correctly – will let you know exactly what you can afford to be spending on your orders.

With it, you’ll proactively make smart spending decisions, versus making questionable choices and scrambling to fix them later.

And you’ll be running a smarter, tighter, restaurant.

3: Hold Supplier Reviews

Your suppliers are supposed to be your trusted business partners.

You expect them to deliver quality ingredients. And they do.

You expect them to deliver on time. And they do.

Likewise, you expect them to give you the best prices. Which you may not realize… they don’t.

Your suppliers aren’t necessarily out to get you, but they’re also in the business of making money. So if you’re not paying attention to your ingredient prices, who are they to make sure you start?

That’s why you should be holding supplier reviews. They’re the best way to ensure each of your vendors is treating you fairly. And they’re the key to getting the best prices on all of your ingredients.

Basically, you want to grab time with the person you work with the most at each supplier.

With a date put on the calendar, gather all the information you need. Delivery dates, last prices paid, and quantities are just some of the categories to monitor.

…Hopefully you have all that organized already. Otherwise, that’s a day with your head buried in spreadsheets.

With the information in hand, you can have a productive conversation to improve your restaurant COGS.

You’ll be able to point out where prices shot up. Similarly, you can see where you may be interested in trying bulk orders.

Maybe you’ve done research and are curious why you’re paying above the market average for various ingredients.

Whatever the result, you’ve shown your supplier that you’re dedicated to keeping your costs low. And they’ll see you’re actually paying attention.

If you’re shocked at how much work this seems like, you’d be right.

That’s why we here at Orderly have created the Supplier Review Tool.

All that info we said you need to collect? Our tool does it for you.

So instead of digging through messy spreadsheets, you can simply prepare to save.

Conclusion: 3 Big Changes, Even Bigger Savings

Taking the initiative on your restaurant’s profitability can seem like a daunting task.

And it is.

But if you focus on your restaurant COGS, your budget, and Supplier Reviews, you’ll be taking the best foot forward.

The only downside is, if you do it on your own, you’re adding hours of work to your schedule.

And those hours simply don’t exist.

With Orderly, you’ll only be adding minutes – if that.

Orderly is food cost management done for you.

Your COGS is calculated for you each week. All you have to do is snap photos of your invoices and update your sales data.

No inventory counts, no fudged numbers. It’s cold, hard, data that’s found for you.

Orderly can also help you build a comprehensive, weekly budget based on your habits, and then track your weekly food spend against it.

And with the Supplier Review Tool, it’s never been easier to negotiate lower prices with your suppliers.

Now, there’s only one question left to ask.

If it’s this easy to save you and your restaurant thousands of dollars a year…

… Why are you still letting yourself swim in the red?

Danny Barry

As Orderly's Content Marketing Manager, Danny is always in the weeds of the restaurant business. He's having conversations. He's scouring the internet for research. He's writing until his fingers start to hurt. And it's all to help you run a smarter restaurant. When he's not writing about restaurants, Danny can be found eating at restaurants. Or, you may find him cheering on his beloved Miami Hurricanes.

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