How do top chefs maximise profitability within their restaurants?
My name’s Rhys Edwards, Managing Director of EOG Accountants, and I’ve been talking to award-winning chef Mark Threadgill to see how top chefs maximise profitability within their restaurants.
Profits don’t come easy in the hospitality world, but at EOG Accounting, we understand that while life isn’t just about money, it certainly helps in many ways. A successful business allows you to reward your team, enjoy quality time with family and friends, and invest in customer satisfaction. These perks create a positive loop leading to growth and satisfaction in what you do.
At EOG Accounting, we specialise in helping hospitality business owners achieve their goals. We know that a profitable hospitality business requires skills beyond cooking. It involves a delicate balance of creativity, exceptional customer experience, strategic pricing, and cost management.
In part two of our three-part blog, we share how Great British Menu finalist chef Mark Threadgill handles the business side, manages costs, and provides tips for improving restaurant profitability.
In Part 1, we discussed Mark’s early days, his rise to Head Chef and The Great British Menu experience.
Part 2 (this blog)
In Part 2, we discuss how Mark manages costs, plans and prices menus effectively, exploring his strategies for improving restaurant profitability.
In Part 3, we discuss why Mark believes reviewing the Financials Regularly is important and how he creates a winning mindset within his Team.
Managing Costs
Accurate costing is essential to set prices, ensure dish profitability, and maintain quality while minimizing waste. Without it, restaurants risk financial losses and customer dissatisfaction
Mark meticulously calculates dish costs starting with ingredients:
Accounting for ingredients
The starting point for costing out a dish is always the ingredients, and Mark’s technique is no different. Before anything hits the menu, the cost of each element of the new dish is meticulously calculated.
Here’s an example of how Mark’s calculations may look (he probably isn’t calculating the cost of a basic burger mind!):
| Ingredients | Unit | Purchase cost/unit | Serving unit | Serving cost/unit | Serving size | Cost/serving |
| Minced beef | lb | £5.00 | lb | £5.00 | 1/4 lb | £1.25 |
| Burger bun | Dozen | 4 | Each | £0.33 | 1 | £0.33 |
| Ketchup | Litre | £4 | Milliliters | £0.004 | 45 | £0.18 |
| Subtotal | £1.76 | |||||
| Waste factor (10%) | £0.18 | |||||
| Total menu item cost | £1.94 |
Top tip: Keep organized spreadsheets to update unit prices quickly.
Accounting for Labour
Whether or not you decide to factor the costs of labour into your dishes really depends on how you pay your team. If your kitchen team are salaried, then their costs are what we call fixed costs, i.e. costs of running the establishment; they will be there regardless of how many dishes you sell.
Portmeirion, where Mark works, is a well-renowned, bustling Hotel with relatively consistent customer numbers. Therefore, they have a brigade of chefs and everyone’s on salary. Building out labour costs into the dish isn’t important to Mark, but he highlights that it was critical to manage overtime and maintain consistent monthly staff costs.
However, Mark stated if your kitchen team (or the bulk of your kitchen team) are on variable (zero-hour contracts) and you have labour-intensive dishes on your menu, then labour costs would need to be considered when costing out dishes.
Portmeirion village in the sun
Accounting for other kitchen costs
Mark’s kitchen includes ‘kitchen’ overheads in dish costs. So, from seasoning to oil and butter it’s share of the overhead cost is built in. Ensuring comprehensive expense coverage.
Planning and Pricing a Menu
Seasonality and good Suppliers are Key!
Being the head chef of a fine dining restaurant is all about planning for Mark. He spoke about the importance of seasonality and establishing solid relationships with suppliers. Months ahead of the season, Mark is in talks with his fishmonger and butcher to discuss the products he plans to use. It’s this kind of forward planning that ensures they’re always offering the best and freshest ingredients to their customers.
Achieving the Margin
Mark explained to us that top chefs maximise profitability within their restaurants by concentrating on margins and when it comes to pricing a menu, the starting point is always the cost per dish. After calculating the cost per dish, it would be time to work out how much profit he would like to achieve on that dish. Based on our basic burger costs above, if he wanted to achieve a Gross Profit Margin of 70%, then here’s what his calculations might look like:
Food cost: £1.94
Targeted Gross Profit Margin: 70%
Targeted Menu Price: (£1.94 / (1 – 0.7)) £6.47
In fluctuating market conditions such as today’s market, Mark reviews his prices at least every six months or when necessary, ensuring that the prices reflect any cost increase.
Understanding the market
It’s great to have your starting point for your desired price, but Mark explained how he felt it was also vitally important to keep an eye on what the competition is doing, and at times he will adjust his prices accordingly.
Maximising Profitability
So, here’s the juicy bit!!! How do top chefs maximise profitability within their restaurants?
Securing the best price
Mark prefers having two suppliers per food group. This not only prevents ingredient shortages but also fosters fair pricing through supplier competition.
Foraging and homegrown to maximise profitability
Another great tip Mark shared with us, building on the fact that he likes to use fresh local ingredients, was his use of foraged ingredients. Knowing where to pick certain ingredients takes time, but once you have your locations and timing on point, the food costs are nil!
Additionally, growing herbs is a simple way to cut costs as they require minimal space and attention.
Balancing the Menu
Mark’s focus on balancing the overall costs within his menu sets him apart. Mark’s strategy involves creating a menu with equal sales of each dish. This balance ensures that dishes with higher costs and lower margins offset those with lower costs and higher margins, maintaining an average profit margin.
Maximising Ingredient Usage
Mark’s savvy approach extends to maximising ingredient usage. A classic example Mark shared was how he used different parts of asparagus for a starter and main meal and the trim for the base stock of a vegetarian dish. That’s three different dishes, all benefiting from one ingredient! This efficient use of ingredients reduces wastage and helps balance the cost of using prime, in-season produce.
Minimise Wastage
Addressing trimmings is essential for cost control. Mark’s kitchen makes vegetable stock, ferments trim for future use, or pickles it. Vacuum packing is used for food storage, enhancing freshness, quality, and shelf life.
Although vacuum packs can be expensive, they are factored into food costs.
Top Chefs often use high-quality ingredients that can lower costs
In fine dining, investing in high-quality ingredients can lower dish costs. Quality ingredients often stand alone, allowing for simple yet standout dishes. For example, Mark uses the best scallops, barbecuing them to perfection.
That concludes part two of our blog with Mark Threadgill on maximizing restaurant profitability. Join us for part three, where we explore how Mark reviews financials and instills an award-winning mindset within his team.
Book a discovery call with EOG Accounting today to explore how we can boost the profitability of your hospitality business.
This information is subject to change and is not professional advice. Refer to our disclaimer for more details.
