Labour costs comprise salary, allowances and fringe benefits for employees.
Fringe benefits include health insurance, education reimbursement, childcare and assistance reimbursement, cafeteria plans, employee discounts, personal use of company owned vehicles and other similar benefits.
Outlet Rent and Utilities
Overhead costs, on the other hand, refer to costs that are not classified under labour and food cost.
This includes rent, utilities, taxes, marketing and advertising, office supplies, equipment, training, etc.
Food cost is the cost of all edible ingredients served or sold to customers.
This comprises the costs for fruit, vegetables, meat and all ingredients used in food preparation.
Food cost is also known as your direct cost and refers to the cost of an actual product being sold.
Because the quantity of dishes which are sold may vary and the cost of buying ingredients may fluctuate in comparison to a forecast, your direct cost will also change from time to time.
Tips on Reducing Costs
We’ve discussed how a chef can improve cost efficiency in a restaurant. Now, here’s a look at some other ways to reduce costs that didn’t fit into previously discussed topics.
Use ingredients that are in season
Learn from your suppliers about market conditions, supplies and cost-effective suggestions
Make the most of regional dishes as locally sourced ingredients are usually cheaper
Be a smart buyer and consider the quality and amount of ingredients you buy
Explore the use of common ingredients across several dishes as an ingredient used only in one dish can be a loss maker
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