In the restaurant business, every dollar counts. Here are nine simple strategies to control restaurant costs (food, labor and overhead).
First: Know where your money is going
Before jumping into strategies, it’s crucial to understand where your dollars are headed. For most restaurants, the main expenses come down to three areas: food, labor and overhead. By knowing what percentage of revenue each of these takes up, you’ll be able to spot where you can adjust. Let’s look at each area more closely.
Food cost controls
Controlling food cost is one of the easiest ways to boost your bottom line. Here’s how:
1. Portion control:
Standardized portion sizes reduce waste and ensure consistency, which keeps customers happy and profits stable.
2. Supplier negotiation:
Don’t hesitate to negotiate prices. Signing up with a prime vendor and getting a vendor agreement in place with a major distributor can simplify operations and lower food cost by 3–7% right off the bat.
3. Menu engineering:
Analyzing your menu allows you to make smart adjustments that can drop your food cost significantly. It all starts with recipe costing cards to help identify high-profit items that deserve more focus on the menu.
Labor cost controls
Labor is one of the biggest expenses in any restaurant. But with the right strategies, you can manage it effectively:
1. Effective scheduling:
Use historical data to forecast busy times and stagger start times. This way, you only have the staff you need when you need them.
2. Cross-train staff:
Train employees to handle multiple roles, especially in the kitchen. Cross-training reduces the need for a large staff and keeps operations efficient.
3. Incentive programs:
Offer bonuses tied to key performance indicators (KPIs) to motivate managers and team members to hit targets and keep labor costs in check.
Overhead management
Overhead expenses can eat into your profits if left unchecked. Here are some tips to keep them under control:
1. Energy efficiency:
Investing in energy-efficient equipment can reduce your utility bills significantly. Small changes, like LED lighting or energy-saving kitchen appliances, can save money month after month.
2. Regular maintenance:
Preventative maintenance on equipment saves you from costly repairs down the road. Consider a maintenance contract to keep everything in top shape.
3. Inventory optimization:
Overstocking ties up capital and leads to waste. Keep your inventory lean and accurate to avoid unnecessary expenses.
Each of these tips can make a huge impact. Keeping costs under control is an ongoing challenge, but with the right strategies, it’s achievable. Take a hard look at your expenses and make changes where you can — without sacrificing quality or your core values. After all, every penny saved is a penny earned, and in this industry, every penny counts!