 Hey guys, my name is Wilson. Today, you're in for a treat because we're going to be talking about how do you save costs and what does that mean? Saving costs means more margins for you. More margins means more profit. That means you can bring home lots more money to be able to take care of the people you love. If you have not checked out the video right here, make sure you guys check out this video because we talk about the golden margins. What are the golden margins? Golden margins of what you need to achieve for the biggest three costs that you have. First of all, labor costs, rental costs, and lastly, your food costs because if you are able to control these three costs, that means that you have bigger margins and bigger profits to take home. That's the whole point of this video is to be able to help you and show you the five ways to be able to cut food costs so that way you have more profits. Let's dive right in. The number one secret to be able to save food costs is to track it. A personal story which I'm going to share with you is the fact that before we started tracking our food costs, we were actually running around $35,000 to $50,000 in revenue and we thought we were making a lot of money. But in the end, the money doesn't really show up in my bank account and I really don't know why. It is because of the fact that I didn't track my numbers. Ever since I started tracking my numbers, then I started to understand where my money actually went. After doing that, I figured out that dry ice actually accounted for more than 20% of food costs for us. After we did some calculations, after we had a bunch of meetings, we realized that taking out dry ice might be a better idea because the 20% that we were able to actually spend in the food costs, now we can actually have that as profit. We did a test run and in turn, just because we took out the dry ice, it didn't affect our sales and our revenue. What that means is that 20% which equates to around $2,000 per month went back into our pockets. If I did not track, I wouldn't know where my money went. I wouldn't know which levers to pull. That's a prime example of why you need to be able to track your food costs. In addition to that, after the fact that you started tracking your food costs, you know where your money is going. You should set goals. Goals of how much in percentage of a range you want to fall in between. Typically speaking, 25 to 35% is a good range for cost of goods solds depending on the type of offering that you have. Some might be having higher cost of goods solds, others might have lower cost of goods solds. I'm giving you a generalized number so you can actually have this aim for. For us, before we started tracking, we're hitting around 40% in cost of goods solds. We're talking about cones. We're talking about our ice cream base, milk. All these crazy things that accounted for 40% of our revenue. What that means is if we sell $10 in ice cream, $4 of it goes to our ingredient cost. We're trying to understand why is that the case because everyone else is having such low in food costs like all my other friends and peers. Then we started starting to track our progress, started to track our sales, started to track our cost, and that's when we realized there's a lot of improvements that we can make. Just by taking out dry ice alone, we're able to save so much. Then we started switching out different suppliers because our cones, we were buying from a premium supplier which overcharged us like crazy. Then a day we switched it to another supplier who has equally of a quality product, but they were being a much more fair. In turn, we're able to drive our cost of goods solds down to 25%. This huge gap in that 15% in cost of goods solds became our profit. That's what is so important for you to be able to track your food costs in order for you to know which lever to pull to cut that down. The second secret in cutting food costs is to forecast your sales. What I mean by that is in the food and beverage industry, we have all these kind of waves. We have peak holidays and slower days. As business owners, we need to be able to read into when is it that we have all these peaks and when we have the peaks, we need to be able to order enough ingredients to support the sale that we're going to be able to hit. If you've been running a business for a while, then you can actually forecast this and you need to be able to track this. The reason why you want to be able to do that is because you want to make sure that you capitalize on the holidays and order enough ingredients to be able to support the output that you have during these holiday seasons. However, during the slower times, you need to also forecast and budget for the fact that you're going to order less ingredients. So then that way food doesn't go to waste. At the end of the day, it is super, super important for you to be able to forecast your sales. Even if you don't know, try your very best to do so because any food that goes to waste are your profits, right? So if you do not want to throw your money into the drain and into the garbage, then make sure you start forecasting your sales. Even if you're just starting off, try to think about, hey, you know what? If it's summertime, are we going to sell more ice cream or less ice cream? If it's raining and it's in the wintertime, are we going to sell more ice cream or less ice cream? And because of the fact that it's wintertime, we're going to order less milk because we're going to produce less ice cream. And in turn, less milk means less cost of good salt, less goes to wastage, and in turn, more profits on our end. The third way to cut down your food costs is to audit your menu. A lot of people don't do this because they don't know that it is super important to audit your menu. And this is a secret that I don't share with a lot of people. I'm sharing with you today because you're lucky nonetheless. In your menu, there are items that are high margins, easy to prepare. There are also items that are low in margins and hard to prepare. So which one would you want to be able to sell more? Obviously the one with the high margins and easy to produce. Yet so many different business owners out there also have a lot of items that are high and low in demand and high in preparation time, low in margins. And yet they have to keep buying these items to make sure that they have these items to serve when people order them. If you think about it, why would you even have that as an option on your menu? You would take that out all together because of the fact that they are high in preparation time and low in margin. So make sure you guys audit your menu, audit your menu to find items that are highly generating profits for you and easy to prepare. So to give you an example with 720 suites at our Metro Town location, we completely took out our dry ice premium version because the demographic that shops there, they are looking for something that is quick grab and go. So we're offering them $2 ice creams and we're playing that volume game. Super easy to make, low in cost of goods sales. So we're playing that volume game. Whereas if we were to continue to serve our full service item, it takes around 2-3 minutes to make this item and on top of that the cost of goods sales are really high. That comes with a dry ice experience, the whole meal deal, which is the reason why we started auditing our menu and figured out that you know what, when every time we sell these full service items, the profit that we're making is the same as an ice cream cone. The $7 item, the profitability of this is the same as selling an ice cream cone, which is crazy to even think about it. And at the end of the day, we decided to shelve this item at the Metro Town location, at the mall location that we have, and it ended up selling just the cones because it's high profit and super easy to make. So at the end of the day, audit the menu that you have and trash out those items, shelve those items that are hard to make and high in cost. And in turn, that would free up a lot of cash flow for you to actually just play that volume game or whatsoever. Okay? So this is a very secret way for me to be able to save costs and I'm just shaming all my secrets with you. The fourth way to be able to save some food costs is to be able to audit your operation. And why is it super important to audit your operation? It is because we need to be able to find inefficiency in the system. Okay? What does inefficiency mean? And how does it look like? How does it show up in a restaurant environment? Inefficiency happens when, for example, you're front of the house, okay? Your waiter does not put in the order right, or they don't put it in the POS system properly. All these things are caused by the lack of training or inefficiency throughout the system. So it's really, really important for us to be able to train our staff properly when these things happen. Because if they put in the order wrong, then that means that food goes to waste, right? And we don't want that because we want to save on our food costs. We want to minimize the inefficiency to be able to maximize that gain for us. So at the end of the day, make sure you're able to operate the operation, not just in the front of the house staffing, but also back at the house staffing. We need to ensure that all the chefs are serving things are unified. Because if we just go by the chef's mood of how much ingredient to put in a dish, then that's very ambiguous. Today he might feel good and generous, and he's going to throw a few extra pieces of chicken. The next day, he might not feel that nice. And he's going to be able to skim on some of those chicken as well. So at the end of the day, it's super important for us to create processes in order for all our staff to be trained and following these systems. So that's the reason why at some restaurants you see that they have scale to ensure that the right amount of ingredient is being served for each and every single dish. And on top of that, for you, if you start tracking the operation, start auditing the operation, you're going to be able to see other inefficiencies such as how the ingredient is being prepared. And if the ingredient is not being prepared well, then that goes to waste. And when that goes to waste, that means you're putting your profits in the garbage. So what that means is the more you're able to audit and the more you're able to find the inefficiency in your operation, that means more money you're going to be able to save and more money you're going to be able to put it back in your pocket. At 720 suites, we have very, very strict training and procedures that we follow because we need to ensure that maximum profitability for us. Ever since we started tracking our food costs, we started to realize that our ice cream cones are either this big or this big or this big. So at the end of the day, what did we do? We started to implement a scale system. So we put a scale there and we allow and we tell our staff for every swirl, three swirls, that means 180 to 220 ml of ice cream that we're serving per cup and per cone. And in turn, we're able to actually bring our costs down because we have these processes to ensure that our staff can follow the procedures to take away the inefficiency and put more money in our pocket. The fifth and final way for you to be able to save some food costs is look out for theft. Okay, loss, theft prevention. Super, super important because this really accounts for the majority of the food costs. Okay. If you haven't had a chance to check out the video, check out this video. If loss, theft prevention is an issue for you. Okay. What this means is that some of your staff, because at the end of the day, you're not always there. When you're not always there and if you're running a big house, you need to make sure that it's tight. If it's not tight, that means that a lot of things can go wrong. Okay. Some of your staff might be giving away free food. Okay. And when they give away free food to your friends, that means that your costs of good souls are higher and your revenue, it does not get any higher. And in turn, your food costs would go up. Okay. Another way that your food costs would be going up is when your staff steals from you. Okay. This is a super big red flag for us. And that's allow us to be able to catch one of our staff stealing because our revenue stayed the same, yet our food costs went up. So what did we do? We checked out the cameras because we realized that, Hey, you know what? How come every time this person works, the food costs goes up? They either are giving away a lot of free food or what they do is they sell the food and they don't put the revenue back into the tilt. And in turn, we found out that he was actually stealing by just looking at our food costs. It is crazy the amount of information that looking at the numbers are able to tell you, which is the reason why there's a point one, track your food costs. But nonetheless, if you're able to be able to track your food costs and look for people that are these lost death preventions and to prevent that from happening, you're going to be able to save a lot of money because in the food and beverage industry are margins already slim to none. So if you have a processes to be able to prevent these things from happening, you're basically putting a lot more money into your pocket. And these are the profit that we're talking about. So at the end of the day, when you want to lower your food costs, make sure that you look out for lost death prevention, either from people that are stealing from you or a comping. Make sure you guys track your numbers and look for lost death prevention. So there you go. The five ways to be able to cut some food costs in the link below. I share with you the last 10 years of my food and beverage experience anywhere from negotiating to free rent to creating that crazy winning matrix of a menu to actually knowing what your customers are needing and wanting to serving them exactly what they want to actually having strategies and marketing crazy tactics that have people lining around the block. All these in the link below. Make sure you guys check it out. Otherwise, subscribe along the journey, smash like button. I'll see you guys in the next video.