Running a restaurant has never been easy, but today’s economy has raised the stakes.
Inflation, supply chain volatility, and shifting consumer habits are tightening margins and testing even the most seasoned operators. Every dollar counts, and knowing exactly where costs are rising has never mattered more.
So how do restaurants stay profitable when every ingredient, delivery, and decision feels like it costs more than it used to?
To get perspective, I spoke with Eric Jeffay, senior product manager at MarginEdge, who works closely with operators navigating these pressures daily. He shared valuable insight into how to control food cost in restaurant operations through smarter data use, stronger systems, and simple, consistent habits that make a real difference.
Inflation has put restaurants under real pressure. Costs swing unpredictably, margins tighten, and every menu decision carries more weight. As Eric explains, “Rising food costs driven by inflation are squeezing restaurants from every angle. Ingredients fluctuate weekly and menu prices can’t always keep up.”
Eric notes that it’s not just inflation — things like inconsistent portioning and limited visibility often eat into margins. “Besides keeping a finger on the pulse of plate costs, there’s an even greater need to stay on top of inconsistent portioning, waste, and visibility into actual food costs,” he says.
That’s where integrated tech systems become invaluable. Platforms like MarginEdge give operators a single place to monitor invoices, purchasing, and inventory, revealing exactly where costs are climbing before they spiral.
In short, knowledge is both power and protection.
Understanding where you’re overspending doesn’t have to be a guessing game. Eric explains that comparing “theoretical food costs — what a recipe should cost — with actual costs pulled from invoices and inventory” is the most reliable way to find trouble spots.
When those numbers don’t match, you should try to figure out whether it’s a vendor price change, waste, or portioning drift. “Watching sales and usage in real time helps spot leaks early,” he says.
Automation helps restaurants monitor their data and catch cost issues early, avoiding stressful month-end surprises.
In many restaurants, the biggest savings opportunities aren’t dramatic. Instead, they're hidden in small, everyday inefficiencies.
Things like skipping inventory counts and over-ordering perishables quietly erode profit. Eric notes that “waste from prep stations and inconsistent packaging sizes also add up quickly.”
Tools like MarginEdge help translate these problems from vague suspicions into concrete data. Once you can see where the money’s going, you can fix it.
The days of managing costs through gut instinct are gone. Modern restaurants need connected systems, especially when it comes to POS (point of sale), inventory, and purchasing.
“When your POS, purchasing, and inventory systems talk to each other, managing food costs gets a lot easier,” Eric says. “POS data reveals what’s selling and inventory systems show what’s left. When that data connects, you can see the full story, from vendor to plate.”
With MarginEdge, that information lives in one dashboard, showing exactly what each dish costs in real time.
While every restaurant tracks some kind of cost metric, Eric recommends focusing on a few that reveal the full picture:
“Tracking these consistently shows where efficiency is slipping,” he says.
Automated reporting makes those patterns easier to spot and act on. Instead of poring over spreadsheets, operators see trends visually and respond faster.
The real power of food cost data is when it reveals opportunities to save. Small inefficiencies or slow-moving menu items can quietly add up to significant losses.
Burger 21 discovered data’s real power when they used data to bring clarity, not chaos, to their growing franchise network. As the franchise expanded nationwide, manually tracking invoice data across stores was slow, inconsistent, and error-prone.
With MarginEdge, Burger 21 gained the ability to map costs by product rather than vendor, creating a single source of truth for food cost data across every restaurant. Comparing costs between locations became effortless, recipe updates flowed seamlessly to kitchens, and tracking performance turned into a straightforward, actionable process.
The results speak for themselves — with real-time visibility into inventory, invoices, and sales, Burger 21 cut food costs by 2 percent and made weekly inventories worth the effort.
It’s a prime example of what happens when a brand obsessed with burgers gets equally obsessed with data, turning everyday numbers into smarter decisions, tighter operations, and a healthier bottom line.
When costs are rising, the instinct can be to overhaul everything. But often, the path to savings starts with small, consistent habits. “Start with the basics — keep daily waste logs, portion consistently, and maintain easily accessible recipe books,” Eric advises.
Simple steps like labeling leftovers, tracking spoilage, and reusing trim for stocks or sauces can lead to measurable change. Over time, those routines build a culture of accountability that pays off in reduced waste and tighter control.
“MarginEdge helps operators track and visualize waste trends alongside actual costs, making it easier to see where savings opportunities are hiding,” Eric says. “And there is a digital recipe book that staff love to use.”
Ordering based on habit is one of the most common ways restaurants lose money. Eric’s advice? Forecast, don’t guess. “Consistency is everything,” he says. Here’s how operators can put that into practice:
By automating purchasing and tracking price changes, restaurant food cost software like MarginEdge helps operators buy strategically, not reactively. That small shift in behavior creates savings that build over time.
Reducing food costs doesn’t mean compromising quality or the guest experience. In fact, when done thoughtfully, cost-saving strategies can actually enhance both.
Eric suggests swapping in seasonal or local ingredients as one approach. Seasonal produce often costs less because it’s abundant, and local sourcing can reduce shipping costs while improving freshness and flavor for guests.
Small changes to menus can have a big impact on profitability. Eric says, “Cross-utilizing ingredients across dishes simplifies prep and lowers inventory waste. Even subtle menu design tweaks, like highlighting high-margin dishes, can boost profitability without guests noticing a thing.”
The key is using data to inform these choices. By knowing exactly what each dish costs and which ingredients are most flexible, restaurants can make smarter decisions about substitutions, specials, and portioning.
Menus are a creative expression, but they’re also a cost strategy. Eric explains that “menu data is powerful when it’s tied to real costs.” Knowing exactly what each dish costs allows operators to price strategically, promote high-margin items, and cut or rework those that drain profits.
With automated updates, tools like MarginEdge ensure recipe costs stay accurate even when market prices shift. This keeps you in control, even when the market isn’t.
Keeping a menu appealing while protecting margins is a constant challenge. Eric recommends “rotating specials, cross-utilizing ingredients, and keeping a smaller, tighter core menu.”
This strategy keeps offerings fresh for guests while reducing inventory waste and simplifying prep. By reusing ingredients across dishes and focusing on a streamlined menu, you can maintain variety without inflating costs. That’s a win-win for both diners and your bottom line.
Can you use strategic pricing to protect your margins when ingredient costs fluctuate and markets are unpredictable?
“You can, if used thoughtfully,” Eric says. “Dynamic pricing for market-dependent ingredients like seafood helps maintain margins, while smart menu engineering — strategic placement and design — gently guides guests toward more profitable choices.”
When you have up-to-date food cost data, you can respond to volatility while keeping the guest experience seamless and profitable.
Technology is rewriting how restaurants manage costs.
“MarginEdge takes the headache out of cost control by automating invoice processing, syncing data from your POS, and updating your food costs every day,” Eric says. “It tracks plate costs, highlights variances, and even provides a live view of your daily P&L [profit and loss].”
In other words, automation replaces guesswork with clarity, freeing up time for operators to focus on food and hospitality.
The future of restaurant food cost management lies in prediction, not reaction. “AI forecasting, predictive inventory management, and automation in invoice processing are all game-changers,” Eric says.
These tools help operators prevent waste and purchase smarter by anticipating needs before they arise. And the more data systems like MarginEdge collect, the smarter those predictions become, giving restaurants a real edge in unstable markets.
Restaurants that succeed in uncertain times share one key trait — adaptability.
“Long-term resilience starts with visibility and adaptability,” Eric says. “Restaurants that integrate their systems, keep menus flexible, and build strong vendor relationships can react quickly to market changes.”
By combining operational discipline with tools like restaurant food cost software, operators gain real-time insight that allows them to make decisions proactively instead of reactively. This approach not only strengthens day-to-day operations but also builds a foundation for long-term profitability, even in volatile markets.
Contact Back of House for a free consultation and discover how your restaurant can save money, streamline operations, and make smarter decisions with real-time data.