In today’s competitive restaurant industry, managing costs effectively is crucial for maintaining profitability. The recent GBQ webinar, “Insights on Tackling Food and Beverage Costs for Better Profitability,” brought together industry experts to share their insights and strategies for overcoming the challenges associated with food and beverage costs in today’s business environment of volatile commodities and the threat of tariffs.
Strengthening Distributor Relationships
One of the key topics discussed was the importance of maintaining price transparency in a tariff-related business environment. The panelists emphasized the need for strong relationships with distributors.
Mike Haunert, principal at Haunert Business Services, LLC, and former regional president at Sysco, highlighted the importance of understanding agreements with distributors and being proactive and transparent about primary issues. Leveraging Group Purchasing Organization (GPO) relationships and broker/supplier insights can also play a significant role in managing costs effectively. Communication and flexibility are paramount for a win/win relationship, which includes sharing your areas of concern with your distributor point of contact and also communicating on a regular basis.
Read Also: Tariffs In Focus: Strategic Accounting For Restaurants In A Global Economy
Menu Re-Engineering For Cost Efficiency
Re-engineering menus is another critical strategy for managing food and beverage costs. Joe Hippler, CFO at Thunderdome Restaurant Group, stressed the importance of involving chefs in the cost analysis of menu items. Flexibility with ingredients and open communication with guests about changes can help maintain customer satisfaction while managing costs. He said that utilizing distributor resources and challenging chefs to create appealing meals with available ingredients can lead to innovative and cost-effective menu options.
Forecasting & Managing Tariff Impacts
Predicting the future impact of tariffs on food costs is essential for effective cost management. The panelists recommended using cost and price modeling with historical sales mix data to forecast tariff impacts. Monitoring commodity cost changes and setting target costs for menu items can help businesses stay ahead of potential cost increases. Trend tracking and cost alerts are valuable tools for staying informed about market changes.
Best Practices For Cost Control
The panelists shared several best practices for controlling costs and maximizing efficiency. They said ensuring accurate pack sizes and standardization of units of measure are fundamental steps. Including prep labor costs in recipe costing and monitoring target costs can help businesses maintain profitability, as well as regularly testing recipes and adjusting them based on cost analysis can lead to more efficient operations. Labor costs are a major component of your recipe costs and should be analyzed to determine whether scratch prep or pre-packaged ingredients make the best efficient use of your labor resources to achieve the profitability and quality you are aiming for.
Leveraging Software Solutions
Cutting-edge software solutions can significantly enhance inventory and cost management. Bill Lindsey, partner and co-founder of COGS-Well, discussed the benefits of using inventory control and recipe management systems to track costs and efficiency. Implementing systems that provide accurate data and monitor contract pricing can improve decision-making and profitability.
5 Actionable Tips for Reducing Food and Beverage Costs
1. Strengthen Distributor Relationships
Build trust and transparency with distributors and leverage GPO and consulting relationships for better pricing. Lean into their expertise.
2. Re-Engineer Menus
Involve chefs in cost analysis, be flexible with ingredients, and communicate changes to guests.
3. Forecast Tariff Impacts
Use cost and price modeling, monitor commodity cost changes, and set target costs for menu items.
4. Implement Best Practices
Ensure accurate pack sizes, include prep labor costs in recipe costing, and regularly test recipes.
5. Utilize Software Solutions
Invest in inventory control and recipe management systems to track costs and efficiency.
Trust The Experts
The webinar provided valuable insights into managing food and beverage costs in a challenging business environment. By strengthening distributor relationships, re-engineering menus, forecasting tariff impacts, implementing best practices, and leveraging software solutions, businesses can enhance their profitability and navigate the complexities of the restaurant industry. Our panelists also emphasized the need to be a continual learner and stay abreast of industry trends so you stay informed and can make better decisions with strategic partners.
Of course, over the course of the hour, our panelists provided a wealth of insight and expertise. Fortunately, the full recording is available if you would like to hear everything they had to say.
You are also welcome to reach out to GBQ’s Restaurant Services Team for more information or further assistance when it comes to navigating your business’s food and beverage costs for better profitability.
By Dustin Minton, CPA, MBA, Assurance & Advisory, Restaurant Services
Looking for additional insights to help you manage your restaurant? Check out these resources:
The One Big Beautiful Bill Act: Key Provisions Impacting The Restaurant Industry
IRS Simplifies ERC Compliance: New Guidance Eases Tax Reporting For Restaurants
