After spending the past few issues discussing menus, marketing and manpower, we’re going to discuss the big process underlying every facet of your business: controlling costs.

Nick Bogacz, founder and president of Caliente Pizza & Draft House in Pittsburgh

I’m sure you have heard a lot about “prime costs,” or the direct costs to run your business. For restaurants, this typically boils down to food and labor. These must be monitored daily, but don’t underestimate indirect costs — such as the cost to rent your dumpster, cable rates and the vast amount of other items that are on contract, which should be reviewed and negotiated annually.

Ultimately, though, it’s your food and labor costs that will either make you very profitable or sink your whole pizzeria. The first step is drawing a line for what you are able or willing to spend on those costs. For us, it’s about half our total spend, but a lot of that depends on your location, as wages and ingredient prices vary state-by-state. Then it’s time to rely on your math skills.

• Food cost. Roughly 30 percent of your total spend should go to food, which is about average for the industry. Then you’ll begin to “cost out” your menu, using what you pay for each ingredient and how much of it goes into a given menu item to help determine the price for the item.

Don’t put the calculator away yet. Next, you’ll need to train employees on how much ingredients to use for each item — too much, and you’ll find yourself purchasing more too soon and inflating costs. You’ll want a wall chart, a menu book or even a menu app for your employees to easily reference. Make sure you have some scales on hand to weigh ingredients, or at least a collection of measuring cups — a quick trip to Amazon or some Google searches will help you identify the best equipment for restaurant use.

After breaking down the menu, training the staff and implementing processes to control how much ingredients you’re using in each menu item, the last step is to create inventory procedures to keep track of your items. This is the best way to hold everyone accountable and to also see where your numbers really are.

• Labor cost. When it comes to labor cost and setting your spending target, there are two major factors, beginning with sales. As your sales go up, naturally, your labor costs should go down, as long as you’re maintaining the same staff level. The other factor is what the job market in your area is like and how wages compare in the restaurant industry.

A great tip when setting your goal is to be aggressive. If you set an aggressive goal, ambitious managers will strive to hit it. We have had labor goals as low as 19.5 percent and as high as 24 percent, depending on our sales. That’s for a full-service pizzeria with 150 seats. Our managers constantly hit the goal and even go under goal. Overall, our prime costs sit around a comfortable 50 to 52 percent.

If you’re wondering how we hit those numbers, it’s all about scheduling and cross training — which we will examine in the next issue.

NICK BOGACZ is the founder and president of Caliente Pizza & Draft House in Pittsburgh.  Instagram: @caliente_pizza