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Food Service Cost Reduction Opportunities

Food Service Cost Reduction Opportunities

 There are many moving parts to controlling food costs and the price being paid is only one factor

The other key components impacting food costs are:

  • The Menu
  • Waste
  • Portions
  • Purchasing
  • Theft

The most critical component of all of the moving parts is the Menu. The Menu can impact areas such as:

  • Products purchased
  • Labor required
  • Per resident day costs
  • Nutritional supplement requirements
  • Resident satisfaction
  • Food service equipment needed

All of the above components tie into not only your food costs, but labor costs as well. Standardized recipes need to be used and followed. If they are not followed and additional ingredients are added, this seemingly small change can add significant costs to the food service department. Many times recipes have been developed for the ideal number of residents to be served but unless you are at 100% occupancy, over production may be taking place. To determine what this would cost, you take your per resident day food costs and multiply it by the number of empty beds and you will see how this really can add up during the year. Also, keep in mind that over production may increase your labor costs. An easy way to determine if portion sizes may be too large or a particular item on the menu is not being well received is to watch the trays come back after meal time and note what is left on the trays. The portion cost is not the per unit cost. Too often we consider for example that 6 #10 cans are equal so everything is based on the case price to calculate the per unit cost; however, quite often different brands have more edible portions than others so using the case price is not the best way to determine if you are getting the best deal.

Purchasing is about more than just price. Purchasing too much or too little increases costs. Purchasing too much may create storage issues, money being tied up while inventory sits, food spoilage, as well as theft since it is easier to take something when there is a lot sitting on the shelf. Purchasing too little can cost you if unnecessary trips to the store are required, buying off contract and therefore, higher prices, a lack of consistency of the product and not having material safety data sheets on required products. Finally, theft certainly can add to your costs. Systems need to be put in place to as they say “keep the honest employees honest”. There is no fool proof method but constant vigilance needs to be enforced. Employees are not the only potential culprits; delivery people, sales people and unauthorized individuals may represent a potential problem as well. So as you analyze your cost reduction opportunities, look beyond just the price of the product to where the real savings can be achieved.

Lowest price isn’t always the best price

Doing a comparison of prices is the easiest step in what should be a multi-faceted approach to securing the best price. Too often to the detriment of the facility, this step is the only one undertaken and usually the lowest price is chosen without taking into account other very important factors and steps needed to secure the best deal.
Of course the number of steps that need to be taken to obtain the best price will vary based on the product, its complexity and relationship in use to other products.
Provided below are factors to take into account to achieve the best price, not necessarily the lowest price:

  1. Does the product come in different sizes or quantities per case that will provide a lower cost per unit used?
  2. If the product is one that the quantity used is less than the package size, can the balance of the product be used or is it thrown out?
  3. Is there another product that can perform the same function at a lower cost per unit used?
  4. Is the product readily available through your normal distributors or will it require a special order?
  5. Is there a minimum quantity that you will be required to purchase which could add to your inventory costs?
  6. Is the product used in conjunction with other products, what is the impact?
  7. Will training of staff be required and if so, how much time will be taken away from their normal responsibilities?
  8. Can technology be used to reduce staff time and/or make the products use more efficient?
  9. Can converting to a new product free up staff time?
  10. Can you change your process to reduce or eliminate the need for this item?
  11. Talk with other facilities, your group purchasing organization and suppliers to determine if there are other options.
  12. What is the length of price protection?
  13. Will the product improve the health and well being of your residents?