Imagine Collective

The Challenge

A restaurant operator engaged Imagine Collective to investigate high food costs, identify areas of margin leakage and improve the commercial performance of the business.

Despite generating sales, the restaurant was experiencing significant pressure on profitability, with food costs consuming a disproportionate share of revenue.

The business was operating at a cost of goods sold (COGS) of approximately 52%, substantially reducing the margin available to cover labour, operating expenses and generate profit.

A key contributing factor was excessive portioning, with ingredient quantities exceeding what was commercially sustainable for the prices being charged.

While individual instances of over-portioning appeared relatively small, the cumulative financial impact across daily service was substantial.

The challenge was to identify the true cost of these operational practices, address the underlying causes of margin leakage and improve profitability without compromising the customer dining experience.

Our Approach

Imagine Collective undertook a detailed review of the restaurant’s cost of goods and operational practices to understand where margins were being lost.

Our analysis focused on the relationship between ingredient costs, serving portions, product usage and the revenue generated from menu sales.

Through this process, we identified over-portioning as a significant contributor to the restaurant’s elevated food costs.

The review highlighted how inconsistencies in portion sizes and ingredient usage were creating unnecessary expenditure and reducing the profitability of individual menu items.

Rather than focusing solely on increasing menu prices or reducing ingredient quality, Imagine Collective concentrated on addressing the operational practices driving excessive costs.

We worked with the business to improve portion control and bring ingredient usage into line with more commercially sustainable food cost targets.

The objective was to establish greater consistency in food production, improve visibility over actual product costs and create a more disciplined approach to managing margins.

By focusing on how ingredients were being used throughout daily operations, the business could address the underlying causes of excessive expenditure rather than relying on short-term cost-cutting measures.

A Critical Commercial Outcome

Our investigation identified over $300,000 in annualised margin leakage associated with the restaurant’s cost of goods.

This highlighted the significant financial impact that uncontrolled ingredient usage and over-portioning were having on the business.

Through targeted operational improvements and greater control over food costs, Imagine Collective helped the restaurant reduce its cost of goods from 52% to 25%.

This represented a 27-percentage-point improvement in COGS, fundamentally changing the relationship between revenue and ingredient expenditure.

The improvement demonstrated that substantial profitability opportunities existed within the restaurant’s existing operations, without the need to rely solely on additional customer volume or increased menu prices.

By addressing portion control and improving cost management, the restaurant established a more commercially sustainable operating model and strengthened its ability to protect margins across daily service.

The engagement also demonstrated how seemingly minor operational inconsistencies, when repeated across hundreds of transactions, can create significant financial consequences over time.

Rather than treating high food costs as an unavoidable expense of running a restaurant, Imagine Collective helped identify and address the practices contributing to margin erosion.

The result was a reduction in cost of goods from 52% to 25%, alongside the identification of over $300,000 in annualised margin leakage, providing the business with a significantly stronger foundation for sustainable profitability.