10 Effective Ways to Control Your Food Service Costs

by | Mar 26, 2012

In a recent consumer news report, researchers’ estimate that the average U.S. family of four spends from $500 to $2,000 a year on food they never eat.

“People have started equating throwing food away with throwing away cash,” says one expert. Without a well-researched shopping list, most grocery shoppers will naturally create food waste by overbuying. People tend to overestimate what they need at the store when they are well-stocked at home, and to underestimate what they need when they don’t have enough, he says.

“This problem is the same for long term care facilities, only the scale is much larger,” says Michael Greenfield, CEO of Prime Source. Prime Source is a purchasing company for mid-sized healthcare facilities, including assisted living centers.

Rising food costs, budget cuts, and Medicare/Medicaid cuts make it essential for long term care facilities, healthcare facilities and other organizations to control food service costs.

In 2011, U.S. long-term health-care costs rose 5.6 percent, led by assisted-living expenses, according to a MetLife Inc. study. The state of the economy, combined with rising health-care and energy costs, are having a significant impact on long-term care rates.

By taking steps to keep your cost in control can save you thousands of dollars each year. However, it can be a delicate balancing act to control costs and avoid sacrificing quality of food or service.

Here are some ways that you can control your food service costs:

1. Eliminate as much waste as possible. Similar to consumer households, over-production quickly adds cost for food, labor and supplies for those extra meals. Implement controls for preparation, service, and handling leftovers and adjust recipes for the correct number of servings. (One administrator recommends using clear garbage bags in the kitchen and dining room, rather than black bags, in order for the food service manager to easily monitor waste levels.)

2. Studying your supply chain and make strategic decisions regarding your purchasing process and the items you purchase. For example, purchasing and stocking different brands of the same item is generally more expensive than stocking fewer brands. In addition, it is important to be aware of your reorder point for different items. Determine how much and how quickly you use various supplies so that you don’t end up stocking too much of something that you use infrequently. At the same time, make sure to avoid shortages of items that are used frequently by keeping a large supply on hand.

3. Track price fluctuations so you can make changes at different intervals. Be ready to change food purchases and menus when the price goes up.

4. Reduce the number of vendors and deliveries for additional cost savings. Fewer orders also means that you’ll save time needed to place orders, put stock away, and process paperwork.

5. Joining a group purchasing organization (GPO) can help you save 5 – 10% or more on your food cost (and other supplies, from household items to equipment).

6. Pay attention to your budget and profit/loss statements on a regular basis. Your menu drives decisions related to food purchases, labor/skill level needs, food cost, production schedule, equipment needs, customer satisfaction, nutritional value, service needs, and most importantly, your bottom line.

7. Evaluate whether you need brand name or generic products for each menu item. Also analyze what level of quality is needed.

8. Another way to save is to buy based on the yield rather than the purchase price per unit. Lower priced products can sometimes cost more than higher priced items if they produce a lower yield or fewer servings.

9. Paying bills on time will help lower rates.

10. Implement an inventory system and have a supervisor oversee the check-in and storage of all deliveries.

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