How to Lower Cost of Goods Sold in Restaurants

Running a restaurant is kind of like riding a bicycle. Not because you never forget how to do it, but because it takes a lot of careful balancing work.

Think about it, when you ride a bike, you need to steer, balance, pedal, and avoid pitfalls. When you’re running a restaurant, you need to balance staffing, customer satisfaction, speed of service, and your costs. One of the most important costs to manage is your cost of goods sold (COGS)

Controlling COGS comes down to the work of restaurant personnel and their ability to keep suppliers accountable. As always, this means you need to train your staff and get everyone on the same page.

4 Ways to Lower Cost of Goods Sold

1. Forecast your sales

To avoid inflated COGS, you need to control how much food you order from suppliers. This is where forecasting plays an essential role. Accurate forecasting will help you identify the peaks and valleys in your sales cycle. Reference your sales history, local and marketing calendars to help you make educated guesses at how much food to order. When you create more accurate orders, your COGS will go down and you won’t strain supplier relationships with as many rush orders and last-minute changes to your order.

2. Write accurate food orders

You may have the analytical data to determine how much food to order, but will that order be entered correctly? Training your manager in the best practices for completing an accurate order and having someone double-check the order before it goes out can save a lot of headaches.

And be sure to place your order on time. If your vendor is calling you to request your order, you will be rushed, which increases the likelihood of making mistakes. This will also prevent confusion and disputes with suppliers when inaccurate orders come in.

3. Check your order on receipt

QSR owners and staff are responsible for catching incorrect orders. If you’re shorted or delivered unusable goods, then it’s your responsibility to report it. Doing this prevents problems later on and ensures that your COGS aren’t inflated because your supplier shorted you.

4. Follow up when there are problems

As a customer, it’s your responsibility to double-check your orders on receipt. But, if there’s an issue you also need to take responsibility for getting the refund or credit that you deserve. Make sure to follow up with your driver or rep, tell them the situation, and ask for credit. In most cases, you’ll receive credit. In some cases, you might not. If you don't receive a credit, this may indicate that there's a poor relationship between restaurant personnel and the driver and/or store personnel and supplier support staff. Once you've filed for a credit, double back with your supplier to ensure it was recorded.

Remember, a good relationship can reduce your COGS

A relationship is everything in business, even in something as mundane as ordering food supplies. To keep your supplier relationship strong, focus on maintaining open communication at every point during your relationship. A good first step is setting up a regular meeting with your supplier to ask questions and discuss concerns. This will keep you both on the same page and set you up for success.
Running a restaurant is a balancing act. Don’t let your COGS throw you off track. Implement these four best practices with your team and watch your bottom line improve.