Running a Restaurant/culinary project

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Question
Hi David,  I found your name when researching food cost percentages on the Internet.  I am in culinary school and doing a project on creating my own restaurant.  The concept is a fine dining restaurant in the Texas Hill country of Austin Texas featuring Texas seafood, meats, poultry, Rio Grande fruits and vegetables, and Texas wineries.  It would have a rustic but elegant type atmosphere.  My challenge is to figure out food cost percentages and we need to site information from experts in the field.  I would assume my food costs would be higher than normal considering high end food and elegant atmosphere 30-35%.  Does this sound  reasonable to you.  Thanks for any assistance.

Sharon

Answer
HI Sharon,

You are wise to recognize that the food cost will most likely be higher because of the higher end menu offering.  Even casual dining concepts are finding it very tough to get food costs under 33% right now with rising commodity costs.

Given the current escalation in food prices, I would forecast a food cost of about 36%.  BUT, keep in mind, this is only one component.  If your concept will have a bar and can promote liquor and beer (rather than just wine) your beer, wine, liquor cost of sales could be at 25% or better and would help to offset your higher food costs.  I would forecast about an 85/15 food to alcoholic beverages ratio if you promote beverages.  I realize this is all conceptual, but it is the weighted mix between beverages and food that determine your overall cost of goods.

Also, with higher check averages you can typically expect somewhat lower labor costs.  We always counsel clients not to look at just their cost of goods or just their labor costs.  Look at the "big two" expenses together and try to keep the total of those under 60% if at all possible to maximize the profitability of your restaurant.

Sharon, I hope this helps you!

David Foster
dfoster@fosterandassociates.net
(417) 877-0428 office
(417) 849-1903 cell

Running a Restaurant

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David Foster

Expertise

We have been in the restaurant industry for over 40 years and consult with restaurants, casinos and hotels nationwide. We love helping restaurant operators succeed and can answer any questions related to restaurant start-ups, business plans, operations, labor costs, food costs, liquor costs, employee turnover, marketing etc.

Experience

I am a seasoned foodservice veteran with nearly 42 years experience in the industry. My extensive background includes overseeing multi-unit, multi-concept restaurant operations ranging from cafeterias to fine dining, and everything in between. I have a strong hands-on operations and marketing background that give me a unique insight into the “Real World” challenges of the restaurant industry. I have extensive concept development, menu and recipe development and kitchen layout and design expertise. I am effective in analyzing operational needs and identifying practical solutions in today’s very dynamic foodservice environment. In the industry, I am respected by my peers and have served on the Board of Directors of the Missouri Restaurant Association and have been a featured speaker on the subject of Home Meal Replacement at various national events. I also served on the Culinary Advisory Board of the Ozark Technical College as well as serving on the Board of Directors of Big Brothers, Big Sisters of the Ozarks.

Organizations
Member of the National Restaurant Association, Past Board Member of the Missouri Restaurant Association, Past Board Member of Big Brothers, Big Sisters of the Ozarks

Publications
The Consultant, Seasoned Views (a trade magazine for the restaurant industry)

Education/Credentials
Attended Drury College, Springfield, MO, Varsity Management, SRI

Awards and Honors
I have had restaurant projects featured in The Consultant (a magazine for foodservice consultants with worldwide circulation). I was honored for achieving the highest level of management competence by the Selection Research Institute.

Past/Present Clients
Sugar Creek Casino, Classic Rock Coffee Company, Mark Twain Brewing Company, Springfield Brewing Company, Bruegger's Bagels, M&M Grill, Paco Joe's, Holiday Inn, Hilton Garden Inn, Buffalo Run Casino, Golden Corral Corporation, Crosswinds Café, Chinese Chef, Mr. Dunderbak's Old World Market & Café, Bullfeather’s Wings and Grille, Mainstreet Market, Bear Rock Café, Cartoon's Oyster Bar & Grill, T's Redneck Roadhouse, Jim's Steakhouse, Neighbor's Mill Bakery & Café, Crazy Vine, San Francisco Oven, Maria's Mexican Restaurant, Andy's Frozen Custard, The Granite Club, Umi Japanese Steak, Seafood and Sushi, Springfield Grocer Company, US Foodservice, Premium Standard Farms, Smithfield, Dakota Organic, Kraft Foods, Allens, Inc.

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