Let me ask you a question: when was the last time you were 100% confident in predicting your COGS & profit margins?

It’s been a while, right?

But don’t feel bad about it, the hospitality landscape has been quite volatile (to put it lightly) in recent times. With a constantly faltering supply chain, fluid lockdown situations, and some wetter than usual weather, the cost of goods is proving to be one of the more difficult metrics to keep a tab on.

But all hope is not lost! Read on to find out how you can keep track of your COGS & profit margins, even in times as unreliable as this.

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  1. Bulk ordering

Ordering your inventory in bulk is probably the number 1 way to lower the COGS of an item, and if your space allows, it means that you can cut down on the frequency at which you order certain items.

What was that about space again?

Like I said, if you’ve got a good sized dry store, or some walk-in refrigeration, bulk ordering will be the altar at which you worship the COGS gods. With a large dry store, you can hold all of your seasonings, tinned goods, packaging, and any other dry ingredients you can think of. Buying one 25kg bag of flour will be much cheaper than buying twenty-five 1kg bags, after all.

And if you’ve got the space to keep boxes of produce cool, consider ordering those in bulk too. You can spread them across multiple dishes on your menu, which leads nicely to my next point:

  • Keep it seasonal & reduce wastage

Seasonal produce is a cheat code in hospitality. You see, when it’s in season you can bet your bottom dollar that it’s also going to be in abundance which, in turn, brings the price down. And the best part? This is the time where the quality of it is going to be through the roof!

If you can keep track of which produce is in season, and when, you can develop an ever-changing menu to take advantage of the savings the seasons can bring.

Most things can be worked into more than one dish too, meaning less potential for wastage.

Another way to ensure less wastage is to master the art of preserving. In other words, if you can pickle it, you can jar it up and sell it.

Pickling and preserving doesn’t need the best produce, so it’s perfect for any offcuts or imperfect pieces you might have received. And by working a way to monetise this wastage, it’ll lower your COGS even further!

But how will you know how much further your COGS have been lowered? Glad you asked:

  • Use a food cost calculator

Food cost calculators are an easy way to see exactly how much a menu item is costing you to serve up, and they can be particularly handy for spotting any outliers in your inventory that might be dragging your profit margins down.

Let’s say, for example, you’re offering something with a hard cheese, such as parmesan. Now, parmesan can be expensive but, provided it’s not absolutely essential to a dish, it is quite easy to substitute for something cheaper, like pecorino, or grana padano.

And the same goes for your fruit & vegetables too.

You’ll be able to clearly see when certain produce is starting to go out of season by its rising COGS, and then you’ll have the time, and the tools, to figure out a more cost-effective replacement.

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