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Restaurant operator challenge: what’s the profit margin on your most popular dish? Go!
How’d you do?
Knowing your recipes was the topic of this episode of “Give An Ovation”, hosted by Zack Oates and featuring Mark Kelnhofer. Mark is the President and CEO of Return On Ingredients, a hospitality educator, speaker, and author; safe to say, he’s a treasure trove of knowledge. You should really watch the whole episode, but here’s 4 brief takeaways:
1. Measure Profitability Holistically
Many restaurants calculate the cost of a dish by totaling up the prices of each ingredient in the recipe, but fail to account for direct labor and overhead costs. A thorough look at the true expense of a dish allows you to see if you’re actually making any money from it.
2. Document Recipes In Detail
Do an audit of your recipes. Imagine you’re going to open up 100 new locations next year -what would others need to know to replicate your success? This is Mark’s first to-do when he’s on a consulting job.
3. Make Data Driven Decisions
According to Mark, it doesn’t matter what you did last time, what your competitor does, or that you’ve “got a good feeling about this one”. All business decisions need to be thought through, and of course, that starts with collecting data.
Did someone say data? Oh hi, we’re Ovation. 🙂
4. Re-evaluate Cost Structures
A lot has changed in the restaurant industry over the last decade, and especially in the last few months. Whereas ingredients used to be a larger cost than labor and overhead, things have flipped. Post-COVID-19 is a great time to re-evaluate your revenues and expenses.
Thanks for reading! Make sure to check out the whole podcast, as well as other interviews with restaurant/business gurus by checking out “Give an Ovation” on YouTube, podcast.ovationup.com, or your favorite place to listen to podcasts.
Also be sure to visit returnoningredients.com, restaurantinstitute.com, fblmag.com, and @roingredients on Twitter to learn more and reach out to Mark, the “most accessible man in the world.”