Why Good Kitchens Lose Money
It's usually not one big mistake. It's a collection of small ones.
A kitchen can be busy, serve good food and have a talented team—and still lose money.
I've seen this happen more than once. And usually, the problem isn't that somebody is deliberately wasting food or that the kitchen doesn't care about costs.
More often, the problem is that a handful of small things are happening every day without anyone looking at how they connect.
A little over-ordering here. A little waste there. Portions that aren't quite consistent. Prep that isn't being tracked. Inventory that doesn't accurately reflect what's actually on hand.
None of those things necessarily looks like a crisis.
I've seen versions of these problems throughout my career.
Sometimes the problem is a system.
I have seen a kitchen go through two cases of dish machine detergent in a week, at $128 a case. That's $256 in detergent in one week.
The kitchen was good. It was busy. They had a great team. The problem wasn't that anyone didn't care.
The problem was a combination of systems and communication.
They had a big, nice dish machine, and they had a big, nice three-compartment sink. The three-compartment sink was being filled properly, the chemicals were balanced, and it always looked nice and clean. But it still wasn't being utilized properly.
The result was two people waiting on the dish machine instead of one person working each station and making progress.
That costs money in chemicals.
It also costs money in labor.
And that's the part that can be easy to miss. When you look at the detergent expense by itself, you see a chemical cost. When you look at the operation as a whole, you start to see a workflow problem.
Sometimes the problem is somewhere else in the system entirely.
I was once tasked with figuring out why food costs were high in the bakery of a high-volume corporate restaurant.
From inside the bakery, everything seemed great. The bakers were following recipes, rotating product, keeping things organized and checking all the boxes.
What I didn't see at first was the receiving side of the operation.
It turned out that one of the lead cooks from another area of the restaurant, who was part of the receiving team, was stealing cases of Hershey syrup.
The bakery wasn't the problem.
The people working in the bakery weren't the problem.
The problem was further upstream, in a part of the system that wasn't being examined.
And sometimes the numbers themselves can hide the problem.
I've seen situations where inventory is inflated during slow months to make the inventory appear higher than it actually is, which makes food cost look lower than it really is.
Inflating inventory essentially moves food cost from "food used this period" into "food supposedly still sitting in inventory."
That can hide the symptoms of an operational problem.
Eventually, when the inventory is counted correctly, that difference in cost can show up as extra food usage in the next period.
The accounting problem hasn't been solved. It has simply been pushed into another period.
That's why I believe it's important to look beyond the food-cost percentage itself.
The number can tell you that something is wrong. It doesn't necessarily tell you why.
And that's where the real work begins.
Food Cost Isn't Just About Food
Food cost is one of the numbers that gets watched most closely in a professional kitchen. But food cost isn't really just about food.
It's about everything that happens to that food from the moment it enters the building until it leaves the kitchen on a plate.
Ordering, receiving, storage, preparation, portioning, waste, theft, inventory and even communication can all have an effect on the number.
That's why simply telling a kitchen to "watch food cost" isn't enough. You have to understand what is happening inside the operation.
A kitchen can have good recipes, accurate portions and talented cooks and still have a food-cost problem.
Sometimes the answer is in the numbers. Sometimes it's in the walk-in. Sometimes it's in the prep kitchen. Sometimes it's in the way information moves—or doesn't move—between people.
This is where looking at the entire system becomes important.
When I assess a kitchen, I'm not just looking at what the food cost is. I'm trying to understand why it is what it is.
The problem may be in receiving.
The bakery story I mentioned above is a good example of this. The food-cost problem appeared to be in the bakery, but the actual problem was receiving. The bakery team was doing its job. The issue was happening somewhere else in the operation.
The problem may be in the inventory system.
I've also seen food costs appear to be negatively affected by the way an inventory system was being used across a restaurant group.
One restaurant was paying a different price for certain ingredients than another location. When the first restaurant updated the ingredient prices in the inventory system to match its invoices, those prices overwrote the information being used by the second restaurant.
When Restaurant #2 completed its month-end inventory, the numbers were no longer reflecting the prices that location was actually paying. The inventory results were being distorted by a change made for another restaurant.
Imagine trying to correct a food-cost problem when the numbers you're relying on are already inaccurate. You could spend time changing recipes, adjusting portions, cutting waste or questioning your team when the real problem is the information behind the report.
This is why understanding how an inventory system is set up and how information moves through it is so important. Software can be a valuable tool, but it still depends on the accuracy of the information being entered and how that information is applied.
Before making operational changes, you have to know whether the numbers are telling you the truth.
The goal isn't simply to lower a percentage. The goal is to understand what's driving the percentage and determine whether the underlying process can be improved.
Inventory Can Hide the Problem
Inventory is supposed to tell you what you have.
But an inventory count is only as useful as the process behind it.
If counts aren't consistent, products aren't stored logically, receiving isn't controlled, or waste isn't accounted for, the number on the sheet can look precise while still telling you very little about what's actually happening.
An inventory number is not automatically an accurate number just because it came from a spreadsheet or a software system.
The count has to reflect what is physically on hand. The unit of measure has to be consistent. Products need to be counted the same way from one period to the next. Receiving, transfers, invoices and waste need to be recorded correctly.
If those processes aren't reliable, the food-cost report can send you in the wrong direction.
This is especially important when inventory is used to evaluate a chef or an entire kitchen team. Before judging performance, you have to establish that the information being used is accurate.
Inventory should be viewed as an operational tool—not just a monthly chore. It should help a kitchen understand what it buys, what it uses, what it wastes and where there may be opportunities to improve.
The goal isn't to make the inventory sheet look good. The goal is to make sure it reflects reality.
Look at the Whole Operation
These examples may seem unrelated at first. One involves dish machine detergent. Another involves theft. Another involves inventory practices. And another involves the way software handles ingredient pricing across different restaurants.
But they all point to the same lesson: a problem rarely exists in isolation.
A kitchen is a connected operation. Purchasing affects receiving. Receiving affects inventory. Inventory affects food-cost reporting. Prep methods affect waste and labor. The layout of a kitchen affects how people move, communicate and get their work done.
When one part of the operation isn't working correctly, it can create problems somewhere else. The place where the problem shows up isn't always the place where it started.
That's why I don't believe every food-cost problem should be approached by immediately cutting portions, changing recipes or telling the team to be more careful.
Sometimes those changes are necessary. But first, you need to understand what is actually happening.
Look at the process. Talk to the people doing the work. Follow the product. Check the numbers against what is happening on the floor. Pay attention to how information moves from one person, station or department to another.
You may discover that the answer is a better procedure, a more useful layout, a clearer responsibility, a more consistent inventory process or simply better communication.
Not every kitchen needs a major renovation or an expensive new system. Sometimes a few well-chosen changes can make a meaningful difference.
Start by Asking Better Questions
If your food cost is higher than it should be, start by asking questions before making changes.
- Are inventory counts accurate and consistent?
- Are invoice prices and units of measure being entered correctly?
- Is receiving controlled, and does the product actually reach the areas where it belongs?
- Are recipes, portions and prep yields consistent?
- Is waste being recorded and reviewed?
- Are people and equipment being used efficiently?
- Are the reports reflecting what is actually happening in the kitchen?
You don't need to solve every problem at once. You need to identify the problems that matter most, understand what's causing them and decide which changes are likely to make the biggest difference.
That is a much better starting point than simply telling everyone to lower food cost.
Better Kitchens Don't Happen by Accident.
A successful kitchen isn't built on food cost alone. It takes sound systems, accurate information, practical procedures and a clear understanding of how the operation works as a whole.
Through Barnhill Culinary Consulting, I help restaurants and food-service operations identify problems, improve kitchen systems and find practical ways to work with the space, people and resources they already have.
Sometimes the biggest improvement starts with asking a better question.
Barnhill Culinary Consulting · The Barnhill Kitchen Journal
