AI cost control tips for your menu

We get it. Calculating plate costs may not be the most glamorous part of operating a restaurant. But think of it like starting a recipe without having all of the ingredients or going swimming without one of those weiner-dog pool floaties (not that we use those). Things are easier when you plan ahead. 

Cost control is a vital part of any great business practice, and restaurants are no exception. 

With a plateful of expenses like labor, utilities and inventory (and rent as the cherry on top), you might find yourself biting off more than you can chew sometimes. This can be especially true for calculating plate costs, as fluctuating inventory pricing, perfecting portion sizes and accounting for waste can quickly become overwhelming. 

Luckily, there’s a solution. With technology now a part of our daily reality, automating aspects of your cost-saving practices is becoming easier. Whether you’re a seasoned menu-cost calculating pro or just starting out, leveraging technological tools like AI can save you time, money and a few calculation-induced headaches.

Before we get into tips and tricks to help you save on menu item cost, let’s get a better understanding of exactly why plate cost tracking is so important and take a look at why blind pricing and guestimating just won’t work.  

• Making informed decisions - calculating plate costs helps you to plan and make informed decisions about menu pricing, track overall profitability and set a realistic budget. It’s an essential tool in calculating your cost of goods sold (COGS) and having an understanding of your overall performance. For multi-unit restaurants, calculating plate costs is also important in comparing performance between stores. 
• Maintaining consistent profit margins - part of maximizing profitability starts with understanding which menu items are bringing in the most dough (get it?). It’s important to have a clear understanding of your high and low-performing menu items, which can give you a better gauge of where you may be underpricing or overpricing individual items. Menu analysis also helps standardize recipes, provides a better understanding of labor needs, and highlights where you may be losing money unnecessarily. 
• Reducing food waste - understanding your cost-per-plate on an up close and personal level can support the need for more accurate portioning, which reduces food waste (and saves you money!). Getting a better understanding of your plate costs also helps with inventory management and understanding where you may be buying too much or too little.

Now that we know why tracking menu item cost matters, let’s explore how AI can help control plate costs in today’s tech-savvy world. We’ll look at a few real-world stories and quotes from MarginEdge clients and restaurateurs on our team, with a few AI-focused tech tips mixed in.

1. Get creative with tackling food waste

Bo Davis, MarginEdge co-founder and owner of Wasabi restaurants, found a simple and innovative way to tackle plate cost and food waste. After butchering salmon for sushi, his team noticed there was a significant amount of meat left on the bones. Thus, the salmon chirashi bowl was born. Taking excess salmon and creating an entirely new menu item was a move that not only reduced waste but also increased the yield on each fish, directly lowering plate costs. Talk about a two-for-one special!

How AI can support: AI-powered restaurant management software lets you pinpoint which of your menu items may be contributing to food waste by centralizing your inventory and sales data all in one place, so you can see where variance might be happening. Having a good grasp on where you can decrease waste can help you to revise or completely scrap high-waste or low-profit menu items. (It might also open up some free time to start brainstorming new menu items!) 

2. Get clear on your finances

"Every chef out there should have a financial understanding of the food they’re serving. We can’t put caviar and truffles on everything! We have to rein it in sometimes,” says Ted Deptula, Culinary Director, Crooked Hammock Brewery, a MarginEdge client.

We couldn’t have said it better ourselves. Without understanding your plate costs, inaccurate portion sizing can lead to food waste or short-selling customers. Profit margins can also be inconsistent if you don’t have a good gauge of high and low-performing items. 

How AI can support: Use AI-driven sales forecasting tools to combine historical sales data and daily sales performance, helping chefs and managers make data-driven decisions about what to keep, adjust, or remove from the menu in real-time. Menu analysis tools help monitor ingredient prices in real-time, alerting you to cost fluctuations and suggesting substitutions to maintain profitability.  

PS: MarginEdge clients can learn more about our new MarginEdge plate cost alerts!

3. Make it a group effort

Former restaurateur and MarginEdge Senior Product Manager Eric Jeffay remembers tackling plate costs optimization with a bit of friendly competition: 

“We used to have server contests - the dishes eligible for prizes were always those with the lowest plate costs. The more low-plate cost items and fewer high-plate cost items we sold, the better our food costs were.”

Maintaining healthy plate cost levels doesn’t have to fall just on your shoulders. Get creative about involving staff in the process. Many perspectives are often better than one, and it’s also a great way for staff to feel heard, involved and appreciated. 

How AI can Support: Take the guesswork out of managing plate costs by analyzing data on ingredient usage, sales patterns and profitability with AI-powered menu analysis tools. Use these tools to help you design staff incentives by identifying which low-cost, high-margin dishes to promote.

You can also identify opportunities for friendly competition around things like accurate portion sizing, reducing food waste or menu item reconstruction.

4. Find an effective tracking system

“Our previous inventory system was a desktop application and extremely difficult to use.  Reporting was hard-coded, and any changes or custom reports had to be requested. Invoices were MANUALLY entered. Bill pay, labor and budgeting were non-existent, and the functionality that was available was so cumbersome that it made me want to throw the computer through the window,” says Karen Atwood, Owner/Operator at Mellow Mushroom Pizza Bakers in Sarasota, FL. 

It’s hard to get organized when information is stored all over the place. Consider consolidating information into one central place. The clearer and concise your information system is, the more accurate data you’ll have on all the things that impact plate cost, like inventory, theoretical vs actual usage and general expenses. 

How AI can support - Invest in an AI-powered RMS system that meets (or exceeds!) the needs of your business. Consider automating tedious tasks like invoice entry, reporting and inventory tracking, saving you time and reducing errors. With all your data consolidated in one place, AI can provide actionable insights into inventory management, labor costs and budgeting. This allows you to make informed decisions quickly, ensuring your operations run smoothly and your plate costs stay under control.

Saving on menu items doesn’t have to feel like a game of Guess Who? Sometimes the solutions are closer than you think. Through automating tedious tasks, consolidating your COGS, involving your team and thinking outside the box, reducing plate costs just got easier. With the help of AI, menu item cost control can be as sweet as a (well-portioned, high-margin) blueberry pie.