Introduction

This guide is a framework for systematizing restaurant operations to improve profitability and reduce chaos. It’s not a universal checklist, but a toolkit that adapts toward a team’s maturity level and the health of the business.

Restaurants often survive on razor-thin margins made up for by large volume. Together, COGS (Cost of Goods and Services) and Overhead consume roughly 90% of a restaurant’s revenue. COGS breaks into two parts: the Goods (food and beverage costs) and the Services (labor). By tracking and controlling these systematically–through supply chain management, profitability analysis, and labor discipline–you can target weak points to make the operation more sustainable.

The reference menu items in this guide are samples from a restaurant I was the Chef at over 5 years ago (before Covid). The Order Guide feeds into Inventory, which flows into Menu Profit Analysis. A Prep List connects labor to the menu. Cook Sheets help train new staff and enforce standards.

Start where you have the most pain. If ordering is chaotic, begin there. If labor costs are opaque, prioritize action on team/brigade lists. If menu pricing is inconsistent and you’re losing money when busy, implement the MPA (at least for your top 10 and bottom 10 sellers). Never implement everything at once. Build discipline incrementally based on what your team can sustain.

Contents

Prioritizing Roll-out

The last thing your employees want is a disruption when things are good. If your team is healthy and your labor map has good coverage, very little of what they do needs to be managed. What this type of team needs is a reasoned, not binary, response structure:

  1. What do we do when something breaks?
  2. Can somebody cover for me?
  3. Unsatisfied customers: what’s the protocol? Discounts?
  4. Am I under-communicating? Am I over-communicating?

Other locations are not so lucky. There can be systemic problems that begin in mismanagement. These are the places of Bar Rescue and Kitchen Nightmares.

There is no “one-size-fits-all” approach. You must adapt to team availability pressures and individual performance metrics. Use the health of the business as your main apparatus to drive change.

Order Guide

For the new Chef (outside of learning the current menu and stations and addressing immediate, critical needs), the first responsibility to nail down is ordering. This is often neglected because: the previous KM left, the GM, owner, or shift lead stepped up to cover this responsibility, but nobody has had the time to create and update a comprehensive table.

A new Order Guide will take weeks to compile. You may already be committed to writing an order list every day, submitting to the purveyor before a deadline (15:30), or earlier for JIT items (14:00), or even two days out for bakeries.

Example

Product Vendor Par Unit Mon Tue Wed Thu Fri Sat Sun
Bread
pretzel bun US 2 case 1 - - 1 - - -
Dry Goods
fryer oil RD 3 35# case - 3 - 1 - - -
Frozen
fries US 10 case 2 - 4 - 8 - -
Produce
sauerkraut PP 1 10# tub - - - - 1 - -
Protein
beef, pastrami US 1 case - - 1 - - - -

Guidelines

These tables can be 1,000 items long. Typically, you don’t go through this whole list every day.

One strategy is to work in chunks throughout the week: bold high-rotation items to check every day (100-200 SKUs you always check); grey-fill skippable lines on days you do not get deliveries for that item.

Keep items alphabetical and use sane grouping where possible.

Examples

Kitchen
  • out-of-fridge produce: tomatoes, potatoes, onions
  • in-fridge produce: leafy greens, root veg, herbs, nightshades, mushrooms
  • beef: burger, flat iron, short rib
  • spices: baking, savory, ethnic, general
Bar
  • citrus, herbs, fresh juices
  • dry storage juices, mixers
  • liquor: whiskey/bourbon/scotch, vodka/gin, tequila/mezcal, rum
  • beer kegs
  • beer cans and bottles

Tetris with Time

One fundamental problem that every restaurant faces is storage space. There are several items that need to be brought in at large quantities frequently. For American New: fries, hamburger, fryer oil, buns. If you go through 15 cases of fries in a week, you cannot order 15 cases all at once.

You must stagger strategically: for most, there is simply not enough physical space for the full weekly par. Stagger high case-count items with regularity throughout the week. Stack big-box “zero-prep” receiving items (frozens, bread, fryer oil) on the PM crew’s duties. There are:

  • more workers available Thu-Sat to process busy-par, zero-prep delivery items
  • does not interfere with actual hot line execution
  • pars double or sometimes triple on weekends anyway
  • porters/commis are generally available and need constant direction

Do not shelter PM from the realities of restaurant supply chains.

Outcome: If you go through 15 cases of fries per week and only have space for eight, you’re going to have to play Tetris with Time.

Ordering and Cost Responsibility between Chef and GM

It depends on the responsibility split between both houses. One strategy is to categorize cost on the house that’s most responsible for that item’s waste:

  • BOH - porters: letting soap dispensers overflow
  • FOH - servers: giving out too many napkins, tossing silverware
  • BOH - Sous Chef’s: beef and seafood counts and spoilage
  • FOH - bartenders: liquor spillage
  • BOH - cooks: over-portioning, over-prepping, burning
  • FOH - barbacks: over-juicing
  • BOH - pantry: desert sales vs POS counts

It’s a team effort to correct, but none are responsible for setting rules for others.

Inventory and Pars

This style of order guide also provides a built in inventory system. Keep every record of this guide. Use one guide per week. Compare the par counts over many weeks, average over the number of weeks, and that is your inventory:

$$ \frac{\sum_i{par_i}}{\sum{weeks}} = inventory $$

Inventory should be compared with invoices, hopefully provided through the purveyors online portal and exportable to CSV. Check with the main purveyor (usually, USFoods, Sysco, GFS): how robust are their data exports? Can they compile this for you? Yes. They are paid to do this, but most reps have 30-60 accounts they oversee on a weekly basis and you will be neglected unless you’re Top 5-10 in their revenue. Smaller vendors and store trips must also be reviewed periodically, but the ratio of their billings to that of the main purveyor are orders of magnitude apart. Prioritize.

The “Goods” Part of COGS

This spreadsheet breaks every menu item down by ingredient, by weight, volume, or count, and the cost per unit. Combined with the order guide, this will tell you exactly:

  1. how much each dish costs
  2. provides a scale for spoilage and spillage (trimming meat is usually a 10-15% produce loss–keep track of this)
  3. the profitability of that item
    1. what is the food cost percentage of the item?
    2. what is the revenue, i.e. profit margin of that item?

There are two metrics here.

  1. Ideally, your overall food cost percentage should be in the target of 25-35%. This lowers by two ways: being cheap with product or establishing healthy long-term relationships with new vendors.

  2. Second, the profit margin of each menu item is the difference between price and the cost of that item through purveyors.

  • An appetizer priced at $10 that costs $3 to make has a 30% food cost and a $7 profit margin.

  • A 16oz Ribeye sold a la carte at $35, that costs $20/lb to purchase, has a 58% food cost and a $15 profit margin.

The steak generates twice the revenue, despite having a high food cost. Consider if this requires an increase or if high-percentage items are driving other sales (POS audit).

Example

Menu Profit Analysis for Mac n Cheese and a Hot Pastrami Sandwich menu item.

Dish/Ingredients Comp. Cost/Pound ($/lb) Conversion Product Loss (%) Portion Size (oz) Food Cost ($) Menu Price ($) Food Cost (%)
Mac n Cheese
Macaroni (8oz) RD 1.08 16.00 0.05 8.00 0.57
Cheese sauce * 9.14 80.00 0.10 4.00 0.51
Pkl. jalapenos PE 1.25 16.00 0.10 1.00 0.09
Ch. Bacon RD 3.53 16.00 0.10 1.50 0.37
Ch. Cilantro RD
Panko Br. C. RD 0.87 16.00 0.05 0.50 0.03
Total 1.56 8.00 0.19
Hot Pastrami Sandwich
Pastrami, sliced US 5.08 16.00 0.28 4.00 1.76
Sauerkraut PP 6.61 48.00 0.05 1.00 0.15
Swiss cheese RD 8.20 16.00 0.05 0.75 0.40
Thousand island * 6.27 128.00 0.05 1.00 0.05
House pickles PE 1.69 16.00 0.10 1.00 0.12
Fries US 1.33 16.00 0.05 10.00 0.88
Pretzel buns US 2.92 16.00 0.05 4.00 0.77
Total 4.13 13.00 0.32

Conclusions

Mac n Cheese analysis

  • costs $1.56 to make (in ingredients)
  • sells for $8
  • generates a 19% food cost
  • has a $6.44 profit margin

Hot Pastrami Sandwich analysis

  • costs $4.13 to make (in ingredients)
  • sells for $13
  • generates a 32% food cost
  • has a $8.87 profit margin

When analysts talk about the 30/30/30/10 rule, they are talking about Goods/Labor/Overhead/Profit percentages of revenue, respectively.

The food cost percentages of Mac n Cheese (19%) is profitable in percentage (<30%), but is low margin. The Hot Pastrami Sandwich may appear less profitable in profit share (32% > 30% > 19%) but is more profitable by the margins ($8.87 > $6.44).

This is Part 1 of COGS: Goods.

The guideline for the Chef is to bump pricing up, or scale other items toward, a local or overall food cost percentage (once accounting for all items). It is critical for the owner, the investors, the GM and the Chef, to all be involved here. There’s a lot of details under the surface that each department head will have to substantiate.

Prep List as a Labor Sentinel

The “Services” Part of COGS

The prep list is production pars. These increase around events and by time-of-week (slow par vs. busy par). The Prep List connects the Order Guide to Menu Profit Analysis. The Executive Chef should save every prep list and, ideally, keep a running tally of time logged per item performed. Chef: use a timer and a scale when you do this personally. Assess your staff’s proficiency to perform each task and whether the labor scales with pay-grade.

This is Part 2 of COGS: Labor.

Deviled Eggs may have a $0.50 food cost per order, but a batch of 15 orders takes half an hour for one person to prep. Furthermore, they have a high waste factor: forgetting boiled eggs can make them impossible to peel and serve. Are they worth $7-10 of labor to prep? Consider if you’re selling a high enough volume to make up for the stuck-cost, or if these are staples.

Example

Dish/Ingredients Par Mon Tue Wed Thu Fri Sat Sun
Sauces
Cheese sauce 3 quarts 1 1 1 1 1 1
Thousand Island 6 quarts
Proteins
Pastrami 1x 8 quarts 0.5 1
Chop Bacon 1 quarts 1 2 2
Cheeses
Swiss cheese, sliced 1 block 1
Veggies
Ch. Cilantro 1 cups 1 1 1 1 2 2
Pkl. Jalapenos 8 quarts 1

Have your prep-cooks either log their work as a group on this sheet, or mark their items with initials after they complete an item. Give senior chefs leeway on this unless there’s systemic repeated failures, lack of accountability, or frequent 86’s.

Any prep items not completed by AM crew should be compiled for the PM crew. Leave them with forgivable, short-burst prep-items based around the stovetop and cutting boards, like chopping veg or boiling and portioning pasta. They rarely have the time, oven space, nor adequate isolation of sanitary prep space to portion slider patties or break down chickens. But dishwashers and commis often do.

This is your Menu’s Wikipedia.

This documentation should be publication-quality that servers, as well as customers, can reference. The Menu Matrix is indispensable for answering any question about food allergy, dietary restrictions, or quality and origin of product (wild caught vs. farmed, cuts of beef, why we may favor one of the alternatives, etc.).

Example

Mac n’ Cheese - A bechamel three cheese sauce (mornay) is tossed with cooked macaroni noodles, pickled jalapenos, and chopped bacon which is then topped with a cilantro panko breadcrumb gratin.

  • Bechamel - a white sauce that is made from a white roux (butter and flour) and milk or cream.
  • Panko breadcrumb - a Japanese style breadcrumb traditionally used as a coating for deep frying food.
  • Gratin - a culinary technique in which an ingredient is topped with a browned crust, often using breadcrumbs, cheese, herbs, etc.
  • Cook Time - low
  • Allergies - dairy, gluten

Hot Pastrami Sandwich - 4 ounces of pastrami meat is thinly sliced and served hot on a 4” pretzel bun with melted swiss cheese, house sauerkraut, thousand island and dill pickles.

  • Sauerkraut - Cabbage that is pickled in its own brine and fermented by lactobacillus cultures (and other lactic acids) naturally present in the atmosphere that feast on the sugars of the cabbage
  • Pastrami - A cut of beef from the plate (pectoral muscle) that is brined, dried, spiced and aged–similar to corned beef
  • Cook Time - low
  • Allergies - gluten, soy, dairy, and eggs

What the Menu Matrix provides

  • Cook Time
  • Allergens
  • Terminology
  • Descriptions
  • Portion Size
  • Cook Temps

Tip: the purpose of the Menu Matrix is to make ease of discovery and speed of comprehension as efficient and concise as humanly possible.

Never use words that sound bad to the customer in their descriptions. Always describe the menu item in a sentence structure that is marketable, compassionate, comprehensible, and memorable.

Avoid: “meat glue”, “chicken grease/fat”, “salmon scraps”.

Better: “bonded” or “of teres major”, “schmaltz”, “salmon bacon/pastrami/lox/poke” (depending on application).

What the Menu Matrix doesn’t cover

  • Equipment
  • Station
  • Re-usage
  • Food Cost
  • Recipes

These are covered instead by Cook Sheets and sometimes graphically laid out by a station map (larger establishments).

Cook Sheets

Cook sheets are meant to help with the onboarding of new cooks (esp. reading material for dishwashers and commis). Do these after the Menu Matrix is complete and your line has developed rhythm and flow.

Example

Mac n’ Cheese - 4 minutes [Saute]

  • Place a small saute pan on an open flame
  • Add (4 oz) cheese sauce, (1 oz) pickled jalapeno, (1 oz) chopped bacon and heat to simmer, flipping or stirring occasionally so it doesn’t burn.
  • Meanwhile, add a portion of macaroni to the hot pasta bath for 30-90 seconds.
  • Strain the pasta and add to the sauce.
  • Flip or stir until combined, taste, then add to a boat bowl.
  • Top with (1 oz) panko bread crumb, then toast in the salamander until golden brown.
  • Place boat on oval plate with a black napkin under boat to prevent sliding during transport.

Hot Pastrami Sandwich - 4-7 minutes [Pass]

  • Butter the pretzel bun and toast in the salamander until golden brown (3-4 minutes).
  • Drop the fries (cf. “Dill Fries” above).
  • Reheat the thinly sliced pastrami on the flat top grill. (N.B. You are not cooking or crisping the pastrami, you are reheating it only so it is hot; it has already been brined, cured, and cooked. Some moisture [stock, short rib jus, water] is necessary to reheat the meat if the grill is slightly too hot.) Then place on a metal tray.
  • Add the swiss, then the sauerkraut to the neatly bunched pastrami meat, then melt in the salamander for 30 seconds (Chef’s note: the sauerkraut is also a living entity from the process of lacto-fermentation, reheating it on the flat top grill kills the natural enzymatic flavor profiles of fresh sauerkraut).
  • On the toasted pretzel bun, add a circular bead of thousand island to both sides of the bun. Put two slices of house dill pickles on the bottom half. Slide the meat, cheese and kraut from the tray onto the bottom bun.
  • Flip the top bun over the toppings, then pierce with fancy bamboo skewers on either half.
  • Cut perpendicular to the bisection of the skewers, and place in one quadrant of a brown deli paper-lined 12" metal tray. Arrange the dill fries neatly against the sandwich.

Cook Sheets cover: timing, equipment, temperature, portion per ingredient, plating

Cocktail Book

Conversely, on the bar’s side, the Cocktail Book is designed to maximize comprehension at a glance or while holding conversations with patrons. Standardize the way featured cocktails are made. People love bartenders that have confidence, experience, and adaptability.

Cocktail trends change. But the 10-12 foundational cocktails (Old Fashioned, Martini, Mojito, etc) are over 100 years old. This is baseline knowledge that any Cocktail Book must provide. Every Bartender will add spin. Make sure their imprint begins with an offer, not an assumption.

Signature Cocktails, however, follow a more hardened standard.

Product Coverage

Binning by house isn’t meant to enforce nor encourage cultural difference–despite the many who still unfortunately do–but it does help isolate vectors of profitability and product loss.

Example

Kitchen / Food / BOH

  • Dry Goods
    • Canned, Pasta/Starch, Condiments, Sauce Jugs
    • Spices
    • Disposables: To-Go Boxes, Utensils
    • Supplies: Cleaning, PPE, Dish/Floor/Mopheads
  • Produce
  • Protein
  • Dairy (incl. Half-n-Half and Milk)
  • Bread
  • Frozen

Tables and Bar / Beverage / FOH

  • Soda bibs
  • Citrus, Mint, etc. (often ordered by the Chef)
  • Mixers
  • Juices
  • Beer
  • Liquor: Whiskey/Bourbon/Scotch, Rum, Vodka, Gin, Tequila/Mezcal, Brandy/Cognac
  • Liqueurs/Amari: Fernet, Campari, Vermouth, Aperol, etc.
  • Wine
  • Disposables: Ramekins, Condiments, Napkins, Cups

Cross-over content (soda bibs, citrus and herbs, milk/half-n-half, tomato juice, disposables) should be directly communicated between both houses.

Alcohol Pricing Rubric

For Alcohol inventory, the pricing split is different from food. A common rule of thumb is:

  • Beer: 4:1
  • Liquor: 5:1
  • Wine: 3:1 - 3:2
  • Food: 4:1

Wine is more of an amenity than it is a pure profit driver. It’s almost always associated with big margin items like pastas, steaks, and seafood, and less common (esp. non-house) around bar food like fries, jalapeno poppers, and chicharrones. Distributors may provide pricing schema if asked.

Terminology Key

  • Wine :: Liquor :: Beer
  • House :: Well :: Domestic
  • Premium/Reserve :: Call/Top-Shelf :: Craft

Overhead

COGS = Labor + Product and Supplies

Overhead = Bills, Taxes, Insurance, etc.

Outside of COGS, the rest is in overhead. This is every other bill the owner has to pay. Traditionally, the rule-of-thumb split is 30/30/30/10:

  • 30% in Labor (40-60% of COGS)
  • 30% in Supplies (60-40% of COGS)
  • 30% in Overhead (Bills, Taxes, Insurance, etc.)
  • 10% Profit: investment in the business

Rarely is this reality. And especially post-Covid. It is only a guide that establishes some general boundaries for immediate red-flagging. For perspective, here are some of the monthly and annual bills the restaurant must recover through sales.

Regulatory, Compliance, and Administrative

  • Payroll services
  • Insurance (general liability, property, etc.)
  • Licenses and permits
  • Workers’ compensation
  • Employee benefits (health, retirement, etc.)
  • ANSUL fire suppression system (inspection, monitoring)

Occupancy / Facility

  • Rent
  • Property tax (if not embedded in rent)

Transaction and Platform Fees

  • POS fees / rake
  • Credit card processing fees

Utilities and Core Services

  • Electric
  • Natural gas
  • Water and sewer
  • Internet
  • Cable / satellite

Building Systems and Preventive Maintenance

  • Hood and ventilation service
  • Refrigeration maintenance
  • Gas lines / water lines

Waste, Environmental, and Exterior Services

  • Refuse and recycling
  • Grease hauling
  • Landscaping
  • Snow removal

Operating Supplies (Non-Food)

  • Linen service
  • Floor mats / rugs
  • Containers
  • Smallwares (kitchen utensils)
  • Dishware and cutlery
  • Glassware
  • Holiday decorations

Repairs and Janitorial Services

  • Plumbing (drains, grease traps)
  • General repairs / handyman
  • Custodial / cleaning services

Clearly, this is a non-trivial and volatile banking and merchant stack that the owner has to constantly square.

Scheduling

Always make your schedule available at least 1 week in advance. Set a cutoff day or time (1 week, 48 hours) for employees to plan for. While BOH is often more regular, and FOH seniority pressure can help with predictability on weekends: always have a fallback plan. Staff, especially younger people, call-out. Keep pressure on flaky mid-level staff members by promoting exposure and opportunities to responsible juniors.

Blackout Days

These are typically your “big events” of the year: Valentine’s, Mother’s, Father’s, Friendsgiving, St. Patty’s. Depending on regional affect: Coast Guard Week, Tulip Festival, Bass Fishing Tournament, etc. Mayfair, Restaurant Week, etc.

These are days that are non-negotiable with staff. Because these are finite, you expect all staff to be available to work on these days. Exceptions for working blackout days are made during hiring, after compiling employee progress reports, and more extreme circumstances communicated directly, not through the employee scheduling portal.

The Midwest and the American South are different from Coastal regions and College towns: they get much busier during the holidays.

Closing and Opening Checklists

You will always find resistance to these, especially from veteran staff. Decide on a strategy if you feel they are needed.

First, the manager has to answer their own internal checklist:

  • is my morning crew happy with the condition of the kitchen when they opened up?
  • is my evening crew happy with the prep and changeover that was done?
  • are these grievances individual or systemic?
  • is it personality or vibes?
  • is it me?

Find a balance. This is a notoriously difficult industry to find good help for. Be forgiving. This rot almost always starts at the top. There is no better persuader than a manager who leads by example.

Progress Reports

Progress reports allow you to provide annual feedback to your employees about their performance. Address what you value about the employee and what they bring to the team. Show them places they can improve. Never make them feel alone.

Cost Analysis Reporting

The Executive Chef and the General Manager should provide the owner reports for special events, including:

  • Valentine’s Day
  • Mother’s Day
  • Pairing Dinners
  • Fundraisers and Memorials

You do this for several reasons:

  • did my business make money on this night, or does it run on a deficit?
  • was labor coverage adequate?
  • what did we miscount?
  • what ran out?
  • what were the common complaints?
  • were tables staggered in seating or did the bar, then the pass, get sandbagged all at once?

The more you write down and periodically record these events, the more adept you become when a component breaks down.

Summary

This guide focuses on COGS, which breaks down into Goods (food and beverage) and Services (labor). The Chef and GM are the accountable parties for COGS (utilities like water, gas, etc usage are overhead items they may monitor, too).

Goods are controlled through Order Guide and Inventory, which feed into Menu Profit Analysis. Requires invoices, receipts, etc to determine both cost and pricing.

Services are controlled, in the kitchen’s case, through the Prep List (and, to a lesser extent, Cook Sheets) which ties labor hours directly to menu items. Monitor how long each item takes to prep (or execute) and determine whether the labor scales with the sale price.

The Menu Matrix sits at the center, documenting every menu item with publication-quality detail. It’s the reference point for servers, managers, and cooks–a single source of truth about allergies, portions, cook times, and ingredients.

Dissemination Index

  • Executive Chef / KM: Main Documents

    • Order Guide
    • Inventory, Pars, and Vendors
    • Menu Matrix
    • Scheduling
    • Recipes / Kitchen Bible
    • Menu Profit Analysis

  • BOH Staff

    • Kitchen Bible
      • Recipes
      • Portioning Guide
      • Cook Sheets
      • Menu Matrix
      • Station Map (mise en place)
    • Prep List
    • Opening/Closing Checklists

  • General Manager: Main Documents

    • Maintains Employee Handbook
    • Rotations, Flights, and Promos
    • POS and Discount/Promo data
    • Scheduling and Staffing
    • Event Planning
    • Photography and Social Media
    • Restaurant-wide Policies

  • FOH Staff

    • Individual Billfolds
      • Floor Plan
      • Menu Matrix
      • Tap List
      • House Reds and Whites
      • Soups and Desserts
      • Features
      • Sidework Checklist
    • Cocktail Book
    • Craft Beer Stats (ABV, IBUs, etc.)
    • Bank/Cash-out Procedure
    • Employee Handbook

  • Owner

    • Bills
    • Repairs
    • Payroll
    • Quickbooks
    • Invoices (after processing)
    • Contracts
    • Governance

  • Management: Owner + GM + Chef

    • Employee Progress and Performance
    • Holidays, Event Coverage, and Profitability
    • Menu Pricing
    • Scheduling and Staffing
    • Write-ups and Dismissals
    • Onboarding