SITUATION: Company A had COGS of 33% and revenues of approximate $70 million. Although, 33% is within normal range of most restaurant concepts, the company had no way to benchmark whether this was a reasonable cost for them.
SOLUTION: A purchasing system was implemented, with an active tie-in to the point of sale system, so that real time product mix could be used to calculate theoretical costs. The theoretical food costs came in around 27%, thereby causing a re-examination of purchasing, storage and usage. The result was a drop in COGS below 29% and a savings of over $2.5MM annually.