New Year Foodservice Budget Tune-up

Recent trends of food cost inflation, rising energy costs, and declines in consumer spending have been challenging foodservice managers to refine their foodservice budgets. The budget equation is simple: costs weighed against revenues. The goal is to maintain profit margin without compromising the food quality and service that are essential to customer loyalty. Here are some ideas for a New Year’s budget tune-up.

Manage food costs

Some food products, such as eggs, experienced price drops recently, while others have edged upwards, reported the National Restaurant Association in September 2025. “Until wholesale prices start trending lower across a broad range of commodities, food costs will continue to be a headwind for many restaurants,” they commented.

A close look at inventory and sourcing can be a strong step to take in January. Technomic advises operators to “work with supplier and purchasing partners to identify ingredient swaps that match your specifications.”

Manage waste

Whether in supplies or food, waste can carve away profits. Waste sneaks into budget performance in many ways. To reduce inventory shrinkage, you can:

• Ensure that perishable inventory orders are matched to forecasting so that food does not spoil
• Carefully check the condition and dates on delivered goods
• Monitor supplies to identify any theft that may be occurring
• Ensure FIFO rotation
• As feasible, look for shelf-stable alternatives to perishable products

Check on portion control

Another source of costly waste is haphazard portioning. The gold standard of menu cost control, portioning can make or break profit margins. Training or re-training employees specifically about portion control is a solid New Year’s step. Aids to portion control include standardized recipes, calibrated measuring utensils, standardized scoops, and visual training aids. To deliver on value while constraining menu prices, some operators have also selectively reduced portion sizes.

Adjust menu pricing strategically

Raising revenue is a crucial piece of the budget equation. Many operators are increasing menu prices in response to rising expenses. Several strategies can help prevent price jumps from making a dent in revenues, says Technomic:

• Raise prices in small increments, ideally no more than 2.5% at a time
• Feature value options to maintain customer loyalty
• Introduce menu innovations that can drive sales with a higher profit margin. “A truly incremental growth item will help subsidize possible changes in margin on problem products where price-sensitivity is too high to adjust,” says Technomic.

Streamline menus

Menu streamlining is a tactic that took hold during COVID and continues today. In essence, it helps operators do more with less. Trimming the least popular items and emphasizing those that drive both popularity and profit margins can go a long way. Fewer items can require less prep and less labor. It can be valuable to identify inventory items and prep tasks that serve cross-purposes to gain efficiency.

Focus on the experience

Delivering excellent customer service and a satisfying foodservice experience can help drive revenues. Timely, accurate orders and friendly service have a strong impact on customer loyalty. At the same time, many consumers seek out foodservice for an enjoyable experience and social connections. Operators can build on these sentiments by offering tasting events or cooking classes with a chef, says the National Restaurant Association. Some operators are leveraging fun social media trends or offering food flights and shareables to tap into the social side of the foodservice experience.

Aim for employee retention

Replacing employees can take a big bite out of the foodservice budget, driving expenses in recruitment, interviewing, and training for new employees. Productivity takes a hit as well, while new employees are getting up to speed on their responsibilities. The National Restaurant Association recommends several key strategies for maximizing employee retention: investing in structured onboarding, providing clear job expectations, mentoring employees, and utilizing digital platforms to enhance engagement. Engaged employees tend to engage customers and deliver superior service.

Explore AI tools

In foodservice as in every industry today, operators are beginning to explore how AI tools can boost efficiency and business intelligence. In this rapidly unfolding arena, some operations are applying AI to automate tasks like scheduling, inventory management, and financial analysis, while using predictive analytics to increase accuracy. An AI-driven browser search can also help operators compare menu pricing or gather ideas for menu innovation.

Earn CE

Learn more about streamlining your menu, making inventory swaps, reducing food waste, and other financial management strategies in the Tunaversity course, Foodservice Cost-Cutting. Here’s to a successful New Year!