So you’ve discovered that your kitchen isn’t the profit center you want it to be. Instead for some reason, your kitchen is dragging down the other parts of your business. Unless you are happy to run your kitchen at a loss, the chances are that you want to plug the losses as soon as possible.

If you have followed my previous recommendations to create a recipe card for every menu item,  then you have by now eliminated the poorly performing menu items, so this should not be the problem.

Assuming that you are now left with profitable menu items only, it’s time to stand back and take stock of the situation: The problem you have is that the ingredients purchased throughout the period are not being sold for profit – they are either being stolen, overcooked and thrown out, expiring before usage, not being delivered in the first place.

20% of your ingredients are going to account for approximately 80% of your profits or losses and these are usually your high end ingredients such as beef tenderloin, lamb, halibut, lobsters, crab etc.

It’s time to make a list of your top ten ingredients by unit cost.

Once you have this done, you’re going to track what happens to these items shift by shift for a week. Seems like a lot of work? So is losing your business because of a poorly performing kitchen.

I recommend doing this out of sight of the kitchen staff, even the Chef. Conduct your opening count before they come on duty and your closing count after they go home.

Use this Free Top 10 Inventory Sheet to track these items easily. If you are losing money in the kitchen, there’s a big chance it’s occurring with these items.

All you’ll need to do is an opening inventory of the items each shift, a list of the deliveries of these items each shift, the quantity sold (get this from the POS) and the closing inventory quantity. The Top 10 Inventory Sheet will then tell you if you are missing items instantly. If you have losses, it’s time to approach the Chef and ask for his feedback and answers as to the losses.

I would be very surprised if this wasn’t enough for him to take action in the kitchen and tighten things up, providing of course, that he is not the problem….

In any case, now that you are measuring regularly, you’ll be able to take appropriate action in the kitchen to put an end to the losses.

As trends have shifted over the past few years, most bar owners came to the realization that they couldn’t generate enough business by focusing solely on drink and so kitchens became a standard addition to the progressive bar.

Many of the bar owners that I have worked with were the first to admit that far from being their area of expertise, they were happy to leave the management of the kitchen to the chef. Sometimes this worked, other times it didn’t. I worked with a bar owner who ran his kitchen at a four figure loss for three months before it was brought to his attention, then there was the bar with more than 80 different dishes on the menu because the chef thought the more menu items, the more opportunities to sell…

Before you think this is an anti-chef rant, it’s not, I have great respect for the talented individuals that run profitable and award winning kitchens. However, you are the owner of the business and it is ultimately your responsibility to know where the costs, profits and losses lie in this vital area.

To work out if you have a profitable kitchen or not, follow these 8 steps:

1. Work out the individual cost of every menu item you serve. To this, download our Recipe Costing Calculator and start to create a Recipe “Bible” for the kitchen whereby every item is costed precisely based on current supplier prices. Bear in mid you’ll have to change this every time your supplier pricing changes.
2. Review the results and decide if there are some dishes worth keeping on the menu. Some may be costing you money or generating so little profit that it’s not worth ordering the ingredients.
3. Perform an inventory of all food items in the kitchen. To do this, you’ll need to download the Kitchen Manager Package.
4. Keep a running tally through your POS system of every dish served in a month. Are there dishes that are never ordered? Again, are you storing ingredients you don’t need?
5. At the end of the month, perform another inventory. You will now have an opening inventory and a closing inventory. This coupled with the cost of your deliveries and your revenue will allow you calculate whether you are profitable or not. Use the Kitchen Manager to help with this calculation.
6. There are two figures you want: Your Ideal Profitability and your Actual Profitability. Your Ideal Figure comes from multiplying the profit you should have achieved per dish based on your Recipe Costing for the month. Your Actual Figure is based on the stock that that is left in the stores at the end of the period. The closer these two figures are to each other, the better your kitchen is performing. If your Ideal Figure suggests you should have achieved a Profit margin of 72% and your Actual Result yields you a 58% Margin, you have a problem.
7. If you do determine that you have a problem, then it’s time to roll up your sleeves and get your hands dirty; you now need to find where the problems lie. It could be that there is too much wastage, it could be that food items are being stolen, it could be that food is expiring too quickly. I’ll deal with these points in the next article, but now that you are measuring your kitchen’s performance, you at least know if there is a problem or not.
8. If your kitchen is performing well, congratulations, you and your chef make a great team. If not, don’t worry, we’ll help you find the ways to address a poorly performing kitchen in the next article.