How to Decrease Restaurant Food Waste and Revenue Loss

How Decrease Restaurant Food Waste and Revenue Loss

REVENUE LOSSThere are a number of ways to analyze and reduce food waste which equals revenue loss.  

  1. Restaurant Prep Sheets
  2. Portion Control
  3. Before Consuming Food
  4. After Consuming Food

Restaurant Prep Sheets
There are restaurants that do not use prep PAR sheets.

What is a PAR sheet?  
A PAR level is a minimum quantity of a given item that a business must keep on hand. When the actual quantity falls below the par level, a new order is placed. The purpose of a PAR level is to prevent shortages, while avoiding holding excess goods.

If your restaurant is not using a PAR sheet when prepping food, then how do you know how much to prep, are you relying on your gut feeling or are you winging it? Either way you are under prepping or over prepping.

Under Prepping
Under prepping will cause customer related issues because you may run out of a specific prepped item. Some of your guests may dine in your restaurant because they crave for a specific menu item.

If you run out of that specific menu item your customers will be upset and may not return solely due to not providing what the customers wants. Remember the term word of mouth, if that guest leaves your restaurant unsatisfied they may tell their friends, family and co-workers about their visit, which may affect repeat business.

Over Prepping
Over prepping will create unnecessary waste and revenue loss. If you conduct inventories and you discover a high food cost percentage, then one of the reasons may be due to over prepping.

The use of the prep PAR sheet will tighten the gap in reducing unnecessary food waste. You will need to collect several weeks of data in order to set PARS based on previous usage in the weeks ahead.

Portion Control
There are certain food items that need to be portioned daily in order to be consistent in the amount of food that a guest will receive. Portioning food also will help keep revenue loss at a minimum.

Some foods that you can portion are:

  • French fries & onion rings
  • Pasta
  • Vegetables/fruits
  • Pre-made sauces
  • Shrimp, calamari, scallops and other various seafood’s

Invest in a digital scale, portion bags and microlite portion containers. This small investment will save you time and money. With the items pre-portioned the cooks will be able to prepare the entrees quicker and the amounts will be consistent which equals more profits.

Decide what items that you want your prep employees to portion and hold them accountable by checking the amounts and weights periodically through spot checks. You will reduce waste loss and revenue loss as long as you are portioning correctly and consistently.

Before Consuming Food
Restaurant food waste that occurred during the food preparation process such as, such as potato peel, roots from leafy vegetables or bones, improperly prepared food, liquids, expired foods and food accidentally spilled on the kitchen floor will create an unnecessary revenue loss.

After Consuming Food
Over portioning food that a customer receives will create revenue loss.  Some restaurants such as diners give a large portion of food to their customers thinking it will create repeat business; in reality it creates revenue loss.

A great idea is to invest in smaller plates; this will help reduce the amount of food on the plate and in return a bigger profit margin. Think of it this way, larger portions mean two things:

  1. A customer does not finish the entire entree and then it is thrown away which equals revenue loss.
  2. A customer boxes up the leftovers, creating a second meal, which is not cost effective. You can price out your menu according to a set food cost percentage that will allow you to make a profit 

Date Dots & First In, First Out (FIFO)
Date dots play a huge role in revenue loss. If you don’t use date dots during the prepping process, then how do you know the correct shelf life of any particular product?

Food Rotation
As your employees put away the deliveries they should rotate the new product behind the old product. If you do not follow this practice, then expired product will create an unnecessary revenue loss. Your managers, kitchen staff and servers should follow first in, first out (FIFO).

What could happen is:

  • Customers may receive a food product that is spoiled which will affect repeat business.
  • You may expose your customers to foodborne illness. Food that is outdated and spoiled can get customers sick.
  • If food is outdated and spoiled you have to throw it away and record it on the waste sheet for tracking purposes.

The Waste Sheet
When employees discover outdated product they should inform the manager so they can determine if the product should be thrown away. Once you throw the product away, it needs to be recorded onto the waste sheet. Enter the date and product information onto the waste sheet, include the employee’s name that caused it to be thrown away, the reason it was thrown away, the manager’s name and the cost of the product.

The Purpose of the Waste Sheet
The main purpose of the waste sheet is for tracking reasons. There are several things that you can learn from the waste sheet:

The reason why the product was thrown away; if you see a specific employee over and over again on the waste sheet it might be a training issue or an I don’t care issue. May be the food item was incorrectly prepared which indicates a kitchen training issue. This gives management a unique tool in reducing revenue loss by monitoring the employee that is responsible in wasting food and why it was wasted.

The manager should always tally the total dollars wasted for a specific period. Example, if your waste sheet is a weekly sheet, add up the entire dollar amounts on the sheet.

Restaurants percentage target goal for waste sheets: should be 10% of the restaurant revenue for that specific period. The 10% represents; food waste before it reaches the customer; spoiled foods and over prepping and after it reaches the customers; food mistakes and comped foods.

Frequent Food & Drink Inventories
There are restaurants that conduct very little or no inventory which is crazy because how are you going to know how much food is missing due to theft or training issues.

Restaurant theft whether it’s food or money represents 4% of the restaurants total food cost for a specific period.

Theft comes in many forms:

  • Managers/ employees stealing product or money from the register
  • Servers altering credit card amounts, then pocketing the cash
  • Managers/servers voiding guest checks, then pocketing the cash
  • Managers/servers, applying unauthorized coupons to customer checks, then pocketing the cash
  • Managers/bookkeepers embezzling money from the restaurant
  • Money missing from the safe fund
  • Product is missing from your food & drink inventories
  • Employees eating without paying for it
  • Vendors shorting the delivery

According to the latest statistics from the United States Chamber of Commerce, 75% of employees have stolen at least one item from their employer. The employee may have stolen a food item or did not pay for the extra item for that specific item. The employee may have eaten an unpaid food item. Either way it’s still theft.

The person that steals from the restaurant, whether it is product or money is usually the person you trust most or the person that you would likely suspect.

Conducting Frequent Inventories
It’s best to conduct inventories by-weekly rather than monthly, why?

The longer you wait to do an inventory the more revenue you will lose. Stick to a shorter inventory, so you can catch inventory issues quicker, which will reduce the shrinkage dollar amount lost during that period.

How to Conduct Inventory
Train your employees to put the truck items away into its designated areas. Use product labels on all food and drink storage areas to simplify the process. If your rooms are organized your inventories will be more accurate.

Use only two employees when conducting the inventory counts. One employee will actually count the product and the second employee will record the counts onto to the inventory product count sheet. It is not recommended to use more than two employees during this process, the more employees involved in the process the chance of more errors.

Once you complete your inventory counts, then enter those figures into your main inventory worksheet, you may have a POS system where those figures can be entered into or you may have an excel spreadsheet that you can use. Once you have recorded those counts, then you should be able to view your alcohol or food cost percentage for that particular period.

Below is the national average for food & alcohol benchmarks: 

Food Cost

  • Generally – 28% to 32% of total food sales

Alcoholic Beverage Costs

  • Liquor – 18% to 20% of liquor sales
  • Bar consumables – 4% to 5% of liquor sales
  • Bottled beer – 24% to 28% of bottled beer sales
  • Draft beer – 15% to 18% of draft beer sales
  • Wine – 35% to 45% of wine sales

Non Alcoholic Beverage Costs

  • Soft drinks (post-mix) – 10% to 15% of soft drink sales
  • Regular coffee – 15% to 20% of regular coffee sales
  • Specialty coffee – 12% to 18% of specialty coffee sales
  • Iced tea – 5% to 10% of iced tea sales

Paper Cost

  • Full-service – 1% to 2% of total sales
  • Limited-service – 3% to 4% of total sales

If your inventory percentage is too high, there is always a reason why it is not in line.

  1. Always retain the hard copy of the original alcohol & food count sheets, file them accordingly. Double check the figures from the hard copy count sheet against the figures you entered into the inventory system, you may have manual key entry errors.
  2. If your inventory is severely off, then it is recommended to redo your inventory.
  3. Make sure you always post all your delivery invoices correctly into the system. Make sure you have received full credit from your purveyors. Use a food & alcohol return credit form; create this form to include date of delivery, product identification number, product name, product cost, driver’s name, manager name and why it was returned. Use the last column to check off when you have received a full credit from the purveyors.

Never be okay with a high alcohol/food cost percentage, investigate why the percentage is too high and react to it. If you do nothing, then expect massive revenue losses. If you can’t find why your alcohol/food inventory is too high, it may be:

  • Theft
  • Improperly trained employees

Over 70% of revenue losses are directly related to your employees, weather it is theft or improperly trained employees. Use alcohol/food perpetual inventories to tighten the gap to find out where and who may be responsible for the thefts.


What is a Perpetual Inventory?
Count key items or items that can be easily stolen before your staff arrives early in the morning. After a particular shift leaves for the day or night recount those same items. Do the math and you will know exactly what is missing from the particular shift. Go into your POS system and generate an item usage report based on that time period. Both figures should match as long as there was no server or cook errors or theft.

If those figures are not matching, then review your waste sheet to determine if those missing items were recorded on the sheet. If they are listed on the waste sheet, why are they listed on the waste sheet and who is responsible.  The waste sheet if used properly and consistently can be used as a valuable tool.

Is there a particular cook or server listed on that waste sheet repeatedly creating errors? If so, retrain that employee, after you retrain that employee and the problem continues, then the documentation process should begin. If that particular employee still continues with that specific issue you may want to re-think is that employee a good fit for my restaurant or bar.

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