Labour Costs
- Labour costs comprise salary, allowances and fringe benefits for employees.
- Fringe benefits include health insurance, education reimbursement, childcare and assistance reimbursement, cafeteria plans, employee discounts, personal use of company owned vehicles and other similar benefits.
Outlet Rent and Utilities
- Overhead costs, on the other hand, refer to costs that are not classified under labour and food cost.
- This includes rent, utilities, taxes, marketing and advertising, office supplies, equipment, training, etc.
Ingredients Costs
- Food cost is the cost of all edible ingredients served or sold to customers.
- This comprises the costs for fruit, vegetables, meat and all ingredients used in food preparation.
- Food cost is also known as your direct cost and refers to the cost of an actual product being sold.
- Because the quantity of dishes which are sold may vary and the cost of buying ingredients may fluctuate in comparison to a forecast, your direct cost will also change from time to time.
Tips on Reducing Costs
We’ve discussed how a chef can improve cost efficiency in a restaurant. Now, here’s a look at some other ways to reduce costs that didn’t fit into previously discussed topics.
- Use ingredients that are in season
- Learn from your suppliers about market conditions, supplies and cost-effective suggestions
- Make the most of regional dishes as locally sourced ingredients are usually cheaper
- Be a smart buyer and consider the quality and amount of ingredients you buy
- Explore the use of common ingredients across several dishes as an ingredient used only in one dish can be a loss maker
