Controlling your Cost of Goods and Cost of Goods Sold (COGS) is one of the clearest paths to a healthier bottom line in the hospitality industry. And yet, I’ve seen operators from mom-and-pop diners to boutique hotels overlook this essential area. The good news? Getting a handle on your COGS isn’t rocket science.  It just takes consistency, a few systems, and a sharp eye on the details.

Here’s how to gain control without sacrificing quality or guest experience.

Know your numbers

Before we can control anything, we need to understand what we’re working with. COGS represents the direct costs of producing your menu items or services; ingredients, beverages, and, in some cases, packaging or other consumables. It doesn’t include labor or overhead like rent.

Start with a reliable POS system and inventory tracking tools that integrate well together. If you're not regularly running a COGS report, you're flying blind.

You should know:

• Your overall COGS percentage (ideally 22–28% for food, 18–24% for beverage)
• All of your menu items and their individual food costs
• What products are moving slowly or expiring on the shelf

Once you’ve got clean data, you can use that data to inform smart decision making and the path forward becomes much clearer.

Menu Engineering: Sell More of the Right Items

Controlling COGS doesn’t always mean cutting costs. Sometimes, it’s about selling smarter.

Take a fresh look at your menu…are you pushing high-margin items or losing money on guest favorites that are too costly to make? A well-designed menu should balance popularity and profitability. Menu engineering tools or even a simple spreadsheet can help you understand which items need attention and which items you should be trying to sell.

Once you know your winners and losers, you can optimize pricing and portion sizes accordingly.

Inventory: Treat It Like Gold

One of the fastest ways to bleed money is through poor inventory control. Every misplaced box of produce or bottle of liquor is a chunk of profit slipping through your fingers.

Here are some best practices:

• Conduct weekly inventory counts…yes, every week. Monthly is too infrequent for most operators.  Once you have control and understand where your inventory dollars are, then you can move to monthly inventories.
• Use the same person or team each time to maintain consistency.
• Track waste daily. If you're not writing down what’s tossed and why, you’re missing the story.
• Use FIFO procedures to rotate inventory and reduce spoilage.

Over time, your inventory habits become your profit habits.

Build Better Supplier Relationships

Your suppliers are more than delivery drivers, they're partners. Don’t be afraid to negotiate pricing, ask about discounts for volume, or explore alternative products. Loyalty can be a good thing, but blind loyalty without competitive pricing is not a virtue in this business.

Audit your invoices regularly. Prices creep up, especially in volatile markets. If you notice a spike, bring it up. You’d be surprised how often suppliers can offer alternatives or match competitor pricing.

Prep and Portion Control

The difference between a profitable kitchen and one that bleeds cash often comes down to what happens on the prep line.

Ensure that you use standardize recipes and portions. Every dish should be prepped and plated the same way every time, no exceptions.  Bartenders who “free pour” are costing you money!  Make sure that you train your team and that you inspect what you expect.  1 ounce of over portioned salmon x 23 dinners a night x 7 nights = 10 pounds of Salmon!   Don’t be afraid to use portioning tools, scales, ladles, pre=portioned containers to keep everything consistent are a chefs’ best friend in controlling costs.

Daily, Weekly, Monthly Habits

The real secret to managing COGS is not a one-time fix, it’s a series of discipline and habits.

Daily:

• Track waste
• Log deliveries and spot-check invoice accuracy
• Monitor sales and item movement

Weekly:

• Run inventory
• Review sales and COGS reports
• Adjust ordering based on forecasted demand

Monthly:

• Conduct a full COGS analysis
• Review menu performance

Consistency turns insights into action. Without discipline, even the best plans will slip through the cracks.

At the end of the day, controlling cost of goods isn’t just a numbers game…it’s a mindset. Build a culture of accountability and attention to detail. Involve your team in setting targets and celebrating wins. When everyone understands the impact of waste and cost creep, they become part of the solution.

Controlling COGS won’t solve every problem in your operation, but it’s a powerful lever to pull…and one that too many operators overlook. With the right systems and a little focus, you can protect your margins and grow your profitability—without compromising the guest experience.