A costing audit for your twenty best sellers

Every dish on a menu was priced against a costing at some point. Since then, ingredient prices have moved, suppliers have changed, portions have drifted and garnishes have been swapped, and few kitchens re-cost their dishes as often as those things happen. The result is a menu whose prices were right once and are now a little wrong on most dishes and badly wrong on a few.

A costing audit finds the few. It is a focused exercise: take the twenty dishes that sell the most, re-cost each one from today's prices and today's portions, and compare the result with what the dish was costed at, or what it needs to earn. It takes about half a day for one venue, as an example, and it usually finds two or three dishes that have lost a meaningful share of their margin without anyone noticing.

This guide sets out how to run the audit, what to look for, how to read the results and what to do about each dish it flags. Every figure in it is an example.

Most menus follow a familiar pattern: a minority of dishes accounts for most of the sales. This is an instance of the general pattern often called the Pareto principle, and on many menus the twenty best sellers carry a large majority of food revenue. A drift in their costs moves the whole food cost; a drift in a dish that sells twice a week barely registers.

Focusing on twenty also keeps the audit doable. Re-costing a full menu of sixty dishes and their sub-recipes is a project that tends to stall. Twenty is a morning's work, and it covers most of the money.

If your menu is short, audit every dish. If it is very long, start with twenty and do the next twenty next quarter.

Rank every dish by units sold over a recent period, four to eight weeks for example. Then look at the ranking by revenue as well, because a dish that sells fewer units at a high price can matter as much as a cheap dish that sells many. Take the top twenty by revenue, and add any dish that is in the top twenty by units but not by revenue.

Include the sides, sauces and add-ons that sell with them if they are priced separately. A side that goes with half the mains can be one of the most important lines on the menu. Our guide to menu mix explains how to read what guests actually order.

Before you start, have these to hand:

The invoice prices are the part most often skipped and most important. A costing done from memory or from an old price list will tell you nothing new.

A costing is only as accurate as the portions it assumes. Before re-costing, check what the kitchen actually serves.

For each of the twenty dishes, weigh the main components of three or four plates during a normal service: the protein, the main side, the sauce. Compare with the specification. If the line consistently serves 190 grams of a protein specified at 160, the real cost is the cost of 190 grams, and the costing should show it.

This is often where the audit finds its largest gap. Prices drift slowly; portions can drift quickly, especially on busy nights and with new team members.

For each dish, cost every component at today's prices and today's portions, including the parts that are usually left out: garnish, sauce, cooking fat and anything served with it. Our guide to plate cost walks through a full plate costing, and our guide to recipe costing covers sub-recipes and yields.

Then calculate two figures from the current price before tax:

Write both next to the dish's original costing, if you have one, or next to what the dish needs to earn.

Now compare each dish's current figures with its original costing or with your targets. Flag any dish where:

In most audits, a handful of dishes are flagged. Two or three usually stand out, often because an expensive main ingredient has risen in price, or because portions have grown.

An invented audit of a restaurant's twenty best sellers finds most dishes within a few per cent of their original costing. Three stand out.

The three dishes together account for most of the margin lost across the twenty. That is typical: the audit is less about the menu as a whole than about the few dishes that need action.

The audit is quicker and its results easier to act on if every dish is recorded the same way. A simple sheet with one row per dish works well, with these columns:

Sort the finished sheet by the monthly money effect. The dishes at the top are the ones to deal with first, whatever their percentages say.

Many of the twenty dishes share components: a stock, a sauce, a dressing, a dough. Re-cost each sub-recipe once, from current prices and its measured yield, and carry the new cost into every dish that uses it.

Sub-recipes are often where costs have moved most without anyone noticing, because they are made in batches from many ingredients, and a rise in butter, cream or a stock base spreads across them quietly. A sauce costed when butter was cheaper can be costing noticeably more per portion today. Measure the yield of each batch again too: a recipe that used to yield 700 millilitres and now yields 600, because it is reduced further, costs a sixth more per portion.

For each flagged dish, choose one of five responses.

When deciding, look at the gross profit per dish as well as the percentage. A dish whose percentage has risen may still leave more cash per plate than others, and forcing its percentage down with a large price rise can cost sales. Our guide to why gross profit per dish beats food cost percentage explains why the cash figure is the better guide for decisions like these.

Multiply each dish's change in gross profit by its monthly sales, as in the worked example. That turns the audit's findings into a sum of money per month, and makes it obvious which dishes to deal with first.

A dish flagged in one audit and fixed is the system working. A dish flagged in two audits in a row is telling you something more.

Sometimes the fix did not hold: the portion crept back up once nobody was watching, or the recipe change was quietly reversed by a cook who preferred the old way. Then the answer is in the kitchen's routine, such as portioning at prep, a scale at the station, or a clearer card. Sometimes the cost of the main ingredient keeps rising faster than the menu is reviewed. Then the answer may be a different dish altogether, or a price that moves more often.

Either way, a second flag deserves a decision at a higher level than the first. Should this dish stay on the menu in its current form? A dish that needs rescuing every quarter is costing time as well as margin.

A single audit is useful. A regular one is far more so. Schedule a costing audit of the top twenty every quarter, and after any large price change on a main ingredient. Each audit is quicker than the last, because the recipes, yields and prices are already gathered.

Between audits, keep the costings current where you can. If ingredient prices are kept on one list and recipes are built from it, a price change re-costs every dish automatically, and the audit becomes a check rather than a rebuild. Our guide to recipe management without a binder nobody opens covers how to set that up.

The kitchen should hear the results, especially when the audit finds portion drift. Explain what was found in money: the fish portion running 25 grams over specification costs about 175 a month at current volumes. Most cooks have no idea what a few grams cost across a month, and once they know, many adjust without being asked.

Be careful to present the findings as information rather than blame. Portions drift for understandable reasons: a new cook, a busy night, a regular who asks for more. The aim is to bring the plate back to the specification, or change the specification deliberately, not to find someone at fault.

The bar benefits from the same exercise. Take the twenty best-selling drinks, re-cost each from current bottle prices and its written spec, check a few pours against the spec, and compare with the drink's price before tax. House pours, cocktails with several ingredients and wine by the glass are where drift most often hides. Our guide to pour cost shows how to cost a drink.

The head chef, ideally with the general manager or owner. The chef knows the recipes and the portions; the manager knows the prices, the sales and the targets. Doing it together means the decisions about each flagged dish are made in the same sitting, by the people who will carry them out.

Set aside the half day in advance, away from service. A costing audit done in gaps between services is a costing audit that stops halfway.

Even though it covers only twenty dishes, the audit usually reveals patterns that apply across the menu: an ingredient whose price has risen in many dishes, a supplier whose prices have drifted, a section of the kitchen where portions run large, a garnish habit that adds cost everywhere. Note these, because the fix often applies beyond the dishes audited.

It also tells you how far your food cost should have moved. If the twenty best sellers have, on average, risen in cost by 4 per cent, and they carry most of your sales, your food cost percentage has risen by roughly that share of itself. That is a useful check against the food cost from your stock counts. Our guide to calculating food cost percentage covers the figure itself.

The re-costed twenty, weighted by their sales, give a good estimate of your menu's ideal food cost: what food cost would be if every dish were made exactly to recipe. Comparing it with your actual food cost shows how much is being lost to waste, portions and counting. Our guide to what an ideal food cost looks like by venue type explains the calculation.

The costing itself, with recipes, yields and invoice prices, stays in your own sheet today: servearound does not hold dish or recipe costs. What servearound does is pick the twenty for you.

The menu report in Analytics ranks every dish by units sold and by revenue over any range of dates, with each dish's share of sales, so the list of best sellers is a few seconds' work. The same report, run for the month after a change, shows whether a re-priced or re-worked dish kept its sales. If you would like to see it, get in touch.

It is a focused re-costing of the dishes that matter most, from current prices and actual portions, compared with their original costings or targets, to find the dishes that have lost margin.

On most menus, a minority of dishes carries most of the sales, so the twenty best sellers cover most of the money. Twenty is also a manageable amount of work for half a day.

Quarterly, and after any large price change on a main ingredient. Each audit is quicker than the last once recipes and prices are gathered.

Rising ingredient prices, especially for the main protein, and portions that have grown beyond the specification. Changed garnishes and substituted ingredients are common too.

Yes. Weigh a few plates of each dish during service. Portion drift is often the largest gap the audit finds.

Fix the portion, change the recipe, change the price, change how it is sold, or deliberately accept the lower margin. Choose one for each flagged dish.

Look at gross profit per dish too, multiplied by monthly sales. That shows which dishes have lost the most money and which to deal with first.

The head chef with the general manager or owner, in a half day set aside away from service, so decisions are made in the same sitting.

Cost it now, and treat today's figure as its baseline. The audit will at least show whether its margin is acceptable, and the next audit will show how it has moved.

Only if they sell often enough to rank among the twenty. A special that runs for a week is better costed before it goes on the board than audited afterwards.

About half a day for twenty dishes in one venue, once the invoices and recipes are to hand. The first audit takes longer; later ones are quicker.

No. A spreadsheet with current invoice prices, your recipes and your sales ranking is enough.

A costing audit re-costs your twenty best sellers from today's invoice prices and today's actual portions, and compares each with its original costing or its target. It takes about half a day and usually finds two or three dishes that have quietly lost a meaningful share of their margin, most often through a rising main ingredient or growing portions.

For each flagged dish, fix the portion, change the recipe, change the price, change how it is sold, or accept it deliberately, judging by gross profit per dish times monthly sales rather than by percentage alone. Run the audit quarterly, keep costs current between audits, and use what it finds about ingredients and portions across the rest of the menu.