Blog

Launching a more lucrative pizza brand through tech-assisted recipe costing

How often do you recipe cost and what factors do you take into consideration? Today, with the proliferation of online ordering tools, POS integrations and restaurant data technologies, pizzerias can generate much more accurate recipe cost analyses and the difference can be a real boost to the bottom line.

June 19, 2019 by Andrew Rosenbloom — Director of Marketing, Consolidated Concepts

It's a well-known fact among pizza brand operators that theirs is an industry that runs on razor-thin margins. Throughout the pizzeria supply chain, profits are made on mere incremental markups.  

But, with ever-rising labor costs, along with real estate, licensing and other operating expenses, it has become increasingly important for pizza operators to stay focused on their margins through heightened awareness of margin-adjacent factors, such as recipe costs, staff retention and table-side selling of the brand's most profitable items.
 
Recipe costing is a complex moving target that can be very tricky to accurately calculate on an ongoing basis. Many restaurants only calculate recipe costs quarterly or when introducing new menu items — and then do so without the most accurate commodity forecasts, pricing information or trend analysis. 

Restaurant tech transforms recipe costing 

But now, with the proliferation of online ordering tools, POS integrations and restaurant data technologies, pizzerias can generate much more accurate recipe cost analyses that factor in up-to-the-minute information.  

"The tech stack is no longer just for IT companies and sophisticated sales and marketing departments," said Mathew Focht, co-founder of Consolidated Concepts, a multi-unit restaurant brand cost reduction consultancy.  "In order to succeed, purchasing departments at restaurants must carefully consider what software and data tools their operation will utilize and how all of those tools integrate to create an accurate and actionable flow of information." 

As an example, Focht pointed to FoodBAM software that allows operators to input complex recipe costing parameters, including labor and waste, to generate a clear picture of what a brand's dishes actually cost to produce. 

Imagine a procurement tool that monitors all of your brand's invoices, records price fluctuations and then automatically adjusts recipe costs based on commodity price changes, markup structures and even inventory. Once a location or brand's recipe costs are nailed down, the work of strategically pricing menu items and marketing them can begin in earnest, along with more accurate forecasting for the business at large.

Accurate recipe costing: The true start of something bigger 

But let's face it, while marketing, promotions and reviews can help push the most profitable menu items, the real key to chalking up more sales of these bottom-line boosters is training and making it worthwhile for servers to sell them. In fact, research shows that 54% of staff menu recommendations result in conversions, although restaurant staff are only making such recommendations less than 5% of the time, according to the MSS US Bartender Influencer Study 2015.

This is a huge opportunity to boost a restaurant's profitability, but servers must be trained to sell right products the right ways. Likewise, getting them to do so is not just a matter of reminding them, it's about effectively communicating why and how to sell the items on your menus. It's worthwhile, too, because when done right, effective training works better to engage staff, glean larger tips, produce more satisfied diners and support stronger margins.
 
Once again, this is an area where technology can play a large role. This is where server incentive programs like Tipzyy enter the picture. This tool creates competitions that run on mobile phones, where servers download the application and undergo training as their time is available and then compete to win cash. In fact, in Tipzyy's case, the tool integrates directly into the POS system to automatically track servers' sales, while populating leader boards, publicizing stats and providing positive reinforcement for selling staff as time progresses.  
 
These contests can be rolled out for an array of initiatives, too, from selling drinks and appetizers, to pushing specific entrees. Contests can be staged for everything from upselling and gathering customer emails, to prompting comment card completions or special event attendance. 

On top of those substantial benefits, restaurants with employee incentive programs have reported a 64% increase in the level of employee engagement over those without one. With yearly turnover in hospitality now hovering around 70 percent on average in an ever-tighter labor market, it's clear that a brand's profitability will only grow through the use of a combination of better recipe costing, server training and rewards programs.

Photo: iStock 

About Andrew Rosenbloom

---

Andy Rosenbloom is a foodservice professional who heads up the marketing team at the Buyers Edge Platform and its associated GPO brands, including Dining Alliance, Consolidated Concepts, Buyers Edge, FoodBAM and others. Andy’s insights come from a cross-section of the operators, distributors, manufacturers, service providers and trend-watchers.

Connect with Andrew: