hey guys my name is Wilson today you're in for a treat because we're gonna be
talking about how do you save costs and what does that mean saving cost means
more margins for you more margins means more profit that means you can bring
home lots more money to be able to take care of the people you love if you have
not checked out the video right here make sure you guys check out this video
because we talk about the golden margins what are the golden margins golden
margins of what you need to achieve for the biggest three cost I have first of
all labor costs rental costs and lastly your food cost because when if you are
able to control these three costs that means that you have bigger margins and
bigger profits to take home so that's the whole point of this video is to be
able to help you and show you the five ways to be able to cut food costs so
than that way you have more profits let's dive right in the number one
secret to be able to save food costs is to track it okay a personal story which
I'm gonna share with you is the fact that before we started tracking our food
costs we were actually running around thirty five to fifty thousand dollars in
revenue and we thought were making a lot of money but in the end the money
doesn't really show up in my bank account and I really don't know why and
it is because of the fact that I didn't track my numbers ever since I started
tracking my numbers then I started to understand where my money and she went
so after doing that I figured out that dry-ice actually accounted for more than
twenty percent of food costs for us and after we did some calculations after we
had a bunch of meetings we realized that taking out dry ice might be a better
idea because the twenty percent that we were able to actually spend in the food
cost now we can actually have that as profit we did a test run and in turn
just because we took out the dry ice it didn't affect our sales and our
revenue so what that means is that that twenty percent which equates to around
two thousand dollars per month went back into our pockets and if I did
not track I wouldn't know where my money went I wouldn't know which levers to
pull that's a prime example of why you need to be able to track your food costs
and in addition to that after the fact that you started tracking your food
costs you know where your money is going you should set goals goals of how much
in percent to arrange you want to fall in between
typically speaking 25 to 35 percent is a good range for cost of goods sold
depending on the type of offering that you have some might be having higher
cost of goods sold others might have lower cost of goods sold I'm giving you
a generalized number so you can actually have the same for so for us before we
started tracking we're hitting around 40% in cost of
goods sold we're talking about Coles we're talking about our ice cream base
milk all these crazy things that accounted for 40% of our revenue so what
that means is if we sell $10 in ice cream
four dollars of it goes to our ingredient cost and we're trying to like
understand why is that the case because everyone else is having such low in food
costs like all my other friends and peers so then we started trying to track
our progress started to track our sales started to track our cost and that's
when we realized there's a lot of improvements that we can make just by
taking out dry ice alone we were able to say so much and then we started swishing
out different suppliers because our combs we're buying from a premium
supplier which overcharge us like crazy and that then a day we switched it to
another supplier who has equally of a quality product but they were being a
much more fair and in turn we're able to drive our cost of goods olds down to 25%
and this huge gap in that 15% in cost of goods sold became our profit and that's
what it is so important for you to track your food costs in order for you to know
which lever to pull to cut that down the second secret in cutting food cost is
about forecast your sales and what I mean by that is in the food and beverage
industry we have all these kind of waves okay we have peak holidays and slower
days so we're as business owners we need to be able to read into when is it
we have all these Peaks and when we have the peaks we need to be able to order
enough ingredients to support the sale that we're gonna be able to hit so if
you've been running a business for a while then you can actually forecast
this and you need to be able to track this and the reason why you want to be
able to do that is because you want to make sure that you capitalize on the
holidays and order enough ingredients to be able to support the output that you
have during these holiday seasons however during the slower times you need
to also forecast and budget for the fact that or you're gonna order less
ingredients so that now a food doesn't go to waste at the end of the day it is
super super important for you to be able to forecast your sales even if you don't
know try your very best to do so because any food that goes to waste are your
profits right so if you do not want to throw your money into the drain and into
the garbage then make sure you start forecasting your sales even if you're
just starting off try to think about hey you know what if it's summertime are we
gonna sell more ice cream or less ice cream if it's raining in this in the
wintertime are we gonna sell more ice cream or less ice cream and because of
the fact that it's winter time we're gonna order less milk because we're
gonna produce less ice cream and in turn less milk means less cost of goods sold
less goes to wastage and then turn more profits on our end the third way to cut
down your food costs is to audit your menu a lot of people don't do this
because they don't know that it is super important to audit your menu and this is
a secret that I don't share with a lot of people I'm sharing with you today
because you're lucky nonetheless in your menu there are items that are high
margins easy to prepare there are also items that are lower margins and hard to
prepare so which one would you want to be able to sell more obviously the one
with the high margins and easy to produce yet so many different business
owners out there also have a lot of items that are high and/or low in demand
hi in preparation time lower margins and yet they have to keep buying these items
to make sure that they have to have these items to serve when people order
them if you think about it why would you even have that as an option on your menu
you would take that out altogether because of the fact that they are high
in preparation time and lower margins so make sure you guys audit your menu audit
your menu to find items that are highly generating profits for you and easy to
prepare so to give you an example with 720 sweets and our Metrotown location we
completely tell how our dry eyes premium versions because that the my graphic our
shops there they are looking for something that as quick grab and go so
we're offering them two dollar ice creams and where you plane that volume
gate super easy to make lowering costs of goods sold
okay so we're taking a ball in Game whereas if we were to continue to serve
our full-service item it takes around two three minutes to make this item and
on top of that the cost of insoles are really high that comes with a dry ice
experience the whole meal deal which is the reason why we started adding
auditing our menu and figured out that you know what every time we sell these
full-service items that profit that we're making is the same as an ice cream
cone okay the seven dollar item the profitability
of this is the same as selling an ice cream cone which is crazy to even think
about it and at the end of the day we decided to shelve this item at the
Metrotown location at the mall location that we have and ended up selling just
the cones because it's high profit and super easy to make so attend a day all
right the menu that you have and trash out those items shelf those items that
are hard to make and high in cost and in turn that would free up a lot of cash
flow for you to actually just play that volume game or what so
okay so this is a very secret way for me to be able to save cost and I'm just
shamed all my secrets of you the fourth way to do is save some food cost is to
be able all that your operation and why is it super important to audit your
operation it is because we need to be able to find inefficiency in the system
okay what does inefficiency mean and how does it look like how does it show up in
a restaurant environment inefficiency happens when for example your front of
the house okay your waiter does not put in the order right or they don't put it
in the POS system properly all these things are caused by the lack of
training or inefficient in efficiency throughout the system so it's really
really important for us to be able to train our staff properly when these
things happen because if they put in the order wrong
then that means that food goes to waste right and we don't want that because we
want to save on our food cost we want to minimize the inefficiency to be able to
maximize that gain for us so at the end of the day make sure you're able to
operate the operation not just in the front of the house staffing but also
back at the house staffing we need to ensure that all the chefs are serving
things are unified because if we just go by the chef's mood of how much
ingredient to put in a dish then that's very ambiguous today he might feel good
and generous and he's going to throw a few extra pieces of chicken the next day
he might not feel that nice and he's gonna be able to skim on some of those
chicken as well so I thought a day is super important for us to create
processes in order for all our staff to be trained and following these systems
so that's reason why at some restaurants you see that they have scale to ensure
that the right amount of ingredient is being served for each and every single
dish and on top of that for you if you start tracking the operations and start
editing the operation you're gonna be able to see other inefficiencies such as
how the ingredient is being prepared and if
ingredient is not being prepared well then that goes to waste and when that
goes to waste that means you're putting your profits in the garbage so what that
means is the more you're able to audit and the more you're able to find the
inefficiency in your operation that means more money going to be able to
save and more money you're gonna be able to put it back in your pocket
and 720 sweets we have very very strict training and procedures that we follow
up because we need to be ensure that maximum profitability for us ever since
we start tracking our food costs we started to realize that our icecream
cones or either this big or this big or this big so at the end of day what did
we did we started to implement a scale system so we put a scale there and we
allow and we tell our staff for every swirl three swirls that means to a 180
to 220 ml of ice cream that we're serving per cup and per cone and in turn
we're able to actually bring our cost down because we have these processes to
ensure that our staff can follow the procedures to take away that
inefficiency and put more money in our pocket the fifth and final way for you
to save some food costs is look out for that okay lost that prevention super
super important because this really accounts a majority of the food costs
okay if you haven't had a chance to check out the video check out this video
in Las fat prevention is an issue for you okay what this means is that some of
your staff because the 10-day you're not always there when you're not always
there and if you're running a big house you need to make sure that's tight it's
not tight and that means that a lot of things are can go wrong okay some of
your staff might be giving away free food okay I'm going to give away free
food to your friends that means that your cost of goods sold are higher and
your revenue it does not get any higher and in turn your food cost would go up
okay another way that your food costs will be
going up is when your staff steals from you okay this is a super big red flag
for us and that's allow us to be able to catch one of our staff stealing because
our revenue is stayed the same yet our food cost went up so what did we do we
checked out the cameras because we realized that hey you know what how come
every time this person works the food costs goes up they either are giving
away a lot of free food or what they do is they sell the food and they don't put
the revenue back into the till and internally found out that he was
actually stealing by just looking at our food costs it is crazy the amount of
information that looking at the numbers are able to tell you which is the reason
why there's a point one track your food costs but nonetheless if you're able to
be able to track your food costs and look for people that are these lost best
Prevention's and to prevent that from happening you're gonna be able to save a
lot of money because in the food and beverage industry our margins already
slim to none so if you have the processes to be able to perform it these
things are happening you're basically putting a lot more money into your prom
your pocket and these are the profit that we're talking about so identity
when you want to lower your food costs make sure that you look out for loss
theft prevention either from people that are stealing from you or comping make
sure you guys track your numbers and look for loss prevention so there you go
five ways to be able cuts on food costs in the link below I share with you the
last ten years of my food and beverage experience anywhere from negotiate free
rent to creating that crazy winning matrix of a menu to actually knowing
what your customers are needing and wanting to serving them exactly what
they want to actually having strategies and marketing crazy tactics that have
people lining around the block all these in the link below make sure you guys
check it out I subscribe along the journey smash like
button I'll see you guys in the next video