10 Effective Strategies to Reduce Restaurant Food Costs in 2025
- January 19, 2025
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Jean-Philippe Serhal
Table of Contents
1. Why Managing Restaurant Food Cost Is Key
But cutting costs shouldn’t come at the cost of quality, and finding the right balance is a tricky, but perfectly doable task. If these costs are not tracked and controlled, a restaurant owner may end up in the undesirable case of selling dishes at a loss.
This is why calculating, tracking, and improving costs is key to the success of your restaurant.
2. How To Calculate Your Food Cost
You could accelerate this process using our Food Cost Calculator.
Once you have calculated your food costs, the next step would be to reduce these food costs to maximize your profitability. The following steps take you through the different techniques you can use to reduce your food costs.
3. 10 Ways To Reduce Restaurant Food Cost
Food costs represent 25% to 35% of a hospitality business’s overall cost, and can often reach 40% in casual dining restaurants. Reducing that cost will certainly boost profitability, and thankfully, several techniques and strategies can be employed to help you achieve your goals.
1. Perform Routine Inventory Audits Utilizing Advanced Technology
Manual inventory tracking is obsolete. In 2025, the most successful restaurants utilize restaurant inventory management software for real-time stock tracking. This facilitates the identification of consumption trends, lowers food waste, and enhances ordering efficiency. Employ predictive analytics to anticipate demand and maintain optimal inventory levels—neither excessive nor insufficient.
2. Leverage AI for Accurate Demand Forecasting
AI-powered demand forecasting helps restaurants accurately predict inventory needs based on past sales data, local trends, and upcoming events. Studies show that over 38% of fruits and vegetables and 21% of dairy products and eggs are wasted due to inaccurate demand planning. To prevent overstocking or understocking, restaurants can implement AI-driven solutions that provide actionable insights, including:
- Tracking historical sales data to identify patterns and forecast future demand.
- Factoring in local events to adjust stock levels based on expected foot traffic.
- Automated inventory alerts to optimize ordering and reduce waste.
- Employee training programs to align stock management with data-driven insights.
By integrating AI-driven demand forecasting, restaurants can optimize inventory, cut costs, and support sustainability efforts.
3. Reducing Food Waste Through Smart Redistribution Channels
Even with accurate demand forecasting, some level of food waste is inevitable. The key to minimizing its impact lies in finding effective channels to redistribute surplus food and ensure it doesn’t go to waste. In 2025, sustainability and profitability go hand in hand, and restaurants can leverage innovative strategies such as:
- Partnering with food donation programs to redirect surplus ingredients to those in need.
- Collaborating with food waste reduction apps to offer discounted surplus meals to customers.
- Repurposing surplus creatively by transforming excess ingredients into new menu items, such as using vegetable scraps for broths or turning leftover bread into croutons.
By implementing smart redistribution strategies, restaurants can cut costs, align with eco-conscious consumer values, and contribute to a more sustainable food ecosystem.
4. Enhance Bulk Procurement through Supplier Cooperation
5. Choosing the Right Suppliers with Data-Driven Insights
Not all suppliers offer the same level of quality and reliability. Leveraging supplier performance tracking tools allows restaurants to assess key factors such as fulfillment rates, pricing accuracy, and delivery consistency. In 2025, data-driven decision-making empowers restaurants to:
- Analyze supplier performance metrics to ensure reliability and consistency.
- Negotiate better pricing based on historical purchasing trends and data insights.
- Detect invoicing discrepancies automatically to avoid unexpected costs and errors.
Partnering with the right suppliers can significantly enhance operational efficiency and profitability.
Track The Performance Of Your Suppliers
Monitor discounts, delivery dates, FOCs, & price fluctuations In real-time
6. Automating In-House Preparation for Cost Savings
While outsourcing pre-prepped ingredients can save time, it often comes at a high cost. By bringing preparation tasks in-house with the help of automation and effective staff training, restaurants can:
- Reduce costs associated with purchasing pre-prepared ingredients.
- Improve quality control by maintaining consistency across all locations.
- Optimize staff productivity with smart scheduling and workflow automation.
Embracing in-house preparation with automation helps restaurants achieve better cost efficiency and operational control.
7. Standardizing Portion Control with Digital Solutions
Maintaining consistent portion sizes is essential to minimizing food costs and ensuring quality, especially as your restaurant scales. High variance in portioning often signals the need for ongoing staff training and monitoring. By leveraging recipe management software and digital tools, restaurants can:
- Pre-portion ingredients using digital scales to ensure accuracy before service.
- Regularly train staff with detailed portioning guides to maintain consistency and reduce waste.
- Monitor portion variances with reporting tools to quickly identify discrepancies and adjust accordingly.
Implementing standardized portion control measures helps maintain profitability, reduces food waste, and ensures a consistent dining experience across all locations.
8. Evaluate Recipe Expenses in Real Time
All About Recipes
Discover how to set up, track, and optimize recipes with a recipe management software
9. Execute Data-Driven Menu Engineering
- Promote high-margin products through smart positioning
- Remove “menu dogs” that adversely affect profitability
10. Enroll in a Group Purchasing Organization (GPO) for Enhanced Discounts
If bulk purchasing isn’t an option, consider joining a Group Purchasing Organization (GPO), which leverages collective buying power to secure better pricing. However, it’s important to weigh the pros and cons:
Pros:
- Lower ingredient costs through bulk pricing
- Access to a wider network of suppliers
Cons:
- Less control over product quality
- Fixed delivery schedules with limited flexibility
Evaluate whether a GPO aligns with your business needs before making a commitment.
4. How To Track Your Food Cost
Tracking your food cost over time may seem daunting, but it doesn’t have to be. With the right tools, restaurant operators can be supported with automation and data to make decisions, save hours of manual work, and cut costs. But… it is key not to leave all the work to machines. Human input is still key to maximize accuracy.
This is why opting for a specialized back-of-house software can be a game-changer to your business. Software like Supy provides you with not just the digital tool to input data accurately and regularly, but to also track your costs in real time using built-in dashboards.
Built-In Cost Analysis Dashboard
Monitor your costs across branches, in real time
5. Think Further: Reduce Food Cost With A Proactive, Digital, Data-Driven Strategy
We’ve established that cutting food costs is hard and that there are several ways to reduce them. But cutting food costs doesn’t need to be reactive, and could instead be proactive.
Opting for a digital, data-driven strategy opens the doors to numerous automation, workflow, and alerts & notification systems. Subscribing to a restaurant inventory management system would help restaurant operators not only save hours of manual work, but stay on top of their business by gaining real-time insights into the health of their operations, and especially when food costs, ingredient price fluctuations, and recipe profitability.
To act proactively, it is imperative that restaurant owners ensure they have the following covered in their digital strategy:
- A Unified Data Architecture
- A Democratized Data Entry
- Real-Time, Data-Driven Decision-Making
- A Unified Data Architecture
Standardizing the way your items, ingredients, and suppliers are named across your branches is key to aggregating data related to food cost across your business, and to analyze it on different levels (groups vs branch).
Opting for a restaurant inventory management software that enables you to compare the price fluctuation of a bottle of ketchup across suppliers and over time can help you in making clearer and more impactful decisions to cut costs.
This eliminates the need for a middleman hired to manually bring the data together, which in turn eliminates the waiting time for executives to access clean data.
- A Democratized Data Entry
Having a regular entry of accurate, reliable, up to date data is immensely valuable to your business. Empowering each member of your staff to enter data feeds your system with real time information that in turn empowers decision-makers with actionable, reliable insights.
This can be done with a mobile inventory application that’s easy to use by all. By adding an in-depth user permissions software with drafter and approver roles, you also ensure that the data input is reliable.
By opting for a restaurant inventory management solution built for the modern user, meaning with ease of access and ease of use, the obstacle of data entry is taken away, thus enabling any member of your team to enter wastage, invoices, and stock counts on the spot.
Democratizing the data entry across your business ensures reliable, up to date information about your food costs, which in turn enables decision makers to identify and address discrepancies faster.
- Real-Time, Data-Driven Decision-Making
Having clear, actionable insights at your fingertip is key to driving your business forward. With built-in alerts, notifications, and restaurant performance dashboards included in your restaurant inventory management software, monitoring and taking action on food costs can be done in real time.
6. Conclusion
Costs are going up and margins are going down. To survive in the hospitality business, restaurant owners must be in control of their costs, especially food costs, which account for 30% of their expenses.
But cutting food costs is hard. Thankfully, there are several techniques at their disposal, namely portion control, reducing waste, and setting clear recipe guidelines, which you can apply to cut costs, without sacrificing quality.
You should, however, embrace technology to help you support your goals through data and automation. Technology should be part of a digital strategy to help you embrace a proactive approach to food cost cutting, namely by ensuring a unified data architecture, a democratized data entry, and instant decision-making capabilities.
7. About Supy
Supy is the data-driven restaurant inventory management platform built to help multi-branch hospitality businesses cut costs. With a suite of 6 interconnected modules covering all aspects of a restaurant’s back-of-house operations, Supy ensures a fluid and constant flow of data within your business, thus empowering restaurant operators with data-driven decision-making.
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FAQ
Reducing food costs is essential for maximizing profit margins, minimizing waste, and improving the overall financial health of a restaurant.
A sustainable food cost percentage typically falls between 28-35%, though it varies by restaurant type and pricing strategy.
Portion control prevents ingredient overuse, ensuring that food costs remain consistent and predictable across dishes.
Bulk purchasing often lowers the per-unit cost of ingredients, but it should be balanced with storage capacity to prevent waste.
An inventory system helps track ingredient usage, prevent over-ordering, and reduce waste, thereby lowering overall food costs.
Monitoring waste allows restaurants to identify sources of loss and implement waste-reduction practices to save on food expenses.
Menu engineering helps identify high-cost/low-profit items, allowing adjustments in pricing, ingredients, or portion sizes to improve profitability.
Training staff on portion control, waste reduction, and efficient food handling can significantly lower food costs by reducing errors and waste.
Local sourcing often reduces transportation costs and shortens the supply chain, potentially lowering food costs while supporting local economies.
Negotiating can secure better pricing, payment terms, or discounts, helping to reduce overall ingredient costs.
Monitoring variance identifies discrepancies between expected and actual costs, allowing adjustments to maintain budget targets.
Standardized recipes ensure consistency, control ingredient costs, and maintain portion sizes, which aids in food cost management.
Seasonal adjustments allow restaurants to use ingredients when they are most abundant and affordable, helping to lower food costs.
Reducing waste minimizes losses, helping restaurants save money by fully utilizing purchased ingredients.
Accurate forecasting helps align inventory with demand, minimizing waste and preventing overstocking of perishable goods.
Technology, such as Supy’s inventory management tools, enables real-time tracking, demand forecasting, and data analysis to optimize purchasing and reduce waste.
Best practices include using the FIFO method (First In, First Out), labeling expiration dates, and regularly checking inventory for spoilage.
Consistent suppliers reduce the risk of unexpected price changes, enabling more predictable food cost management.
Properly priced menu items ensure profitability by covering ingredient costs and contributing to overhead and labor expenses.
Cross-utilizing ingredients across multiple dishes minimizes waste and allows bulk purchasing of key ingredients, reducing overall costs.
