Tips for improving your kitchen profit – make or buy analysis

If your staffing is stretched in the kitchen, and you need to reduce costs or streamline production to ensure profitability and consistency, consider conducting a make or buy analysis. A make or buy analysis is a process used to determine whether it is more cost-effective to prepare an ingredient in-house or to purchase it from a supplier. Here are the key steps to follow to perform a make or buy analysis:

  1. Gather data on the cost of the raw ingredients, labour, and other overhead costs associated with preparing the ingredient in-house.
  2. Gather data on the cost of purchasing the ingredient from a supplier. This includes the cost of the ingredient itself, as well as any additional costs such as delivery or freight fees.
  3. Compare the full cost of preparing the ingredient in-house with the cost of purchasing it from a supplier semi or ready-made.
  4. Consider other factors such as the quality and availability of the ready-made ingredient and the consistency and reliability of the supplier.
  5. Make an honest appraisal of whether there will be any negative customer perception if you change to a ready-made purchased product instead of continuing to produce the ingredient in-house. Most customers are more interested in a consistent quality, appropriate value for money product, not whether it was made from scratch in your premises or not.
  6. Make a decision on whether to prepare the ingredient in-house or to buy it in based on the results of this analysis.

Key take-away:

Maintaining profitability while staffing availability, ingredient cost and quality, power and other overhead costs are volatile requires regular reappraisal of how you do what you do. It’s likely you will have to make some changes that will be difficult to implement if they challenge your preconceived notions of how it ‘should be done’.

You may need to discuss commercial reality with some members of your kitchen team if they feel their creativity and integrity are being compromised.

The reality is, if your kitchen isn’t profitable, everyone’s out of a job.

Ben Walter