By: Sentry Marketing Group

April 30, 2015

Keeping restaurant costs down requires constant vigilance. Here, we look at five key areas where restaurant owners can start plugging leaks, and increasing profits, right away.

1. Staff

   • Be sure you aren’t over-staffing. While you never want customers to have to wait too long for service, remember that most folks understand they’re not the only customers in the place. Also be mindful of staffing during slower shifts and arrange employee schedules accordingly. You probably don’t need a full staff at 9:30 in the morning if you’re running a burger joint.
   • Create contests/ incentives to get employees on board with cost-saving measures. This can be anything from rewards for overall reduced losses to recognition and bonuses for individual employees who help to keep the ship tight.
   • Check that staff are promoting promotions. There is no way to know if your marketing strategies are working if you don’t know how well they are being implemented.
   • Really take a look at how much turnover is costing you. In the restaurant industry, a higher turnover rate is to be expected and is to some degree unavoidable, but make sure that your rates are on par with industry standards and think about whether there might be anything you can do to make them even better. Remember, happy employees make for happier customers, so keeping them around is a win-win-win, with two wins for you.&

2. Marketing

   • Focus on social media/ review sites. The ROI is way higher as the investment can be very small.  Of course, it will take some of your time, but any good marketing strategy will.  Unless you clear data showing that you are getting a good amount of business from billboard, radio, television, bench, Yellow Pages or other old-school advertising, stop throwing away money on ads that require a big initial outlay.

3. Freebies

   • If you bring out free food as an appetizer (bread rolls, tortilla chips), consider starting out with 3 instead of 5, putting them in a smaller bowl, and waiting for customers to ask for seconds before bringing them. These aren’t things that customers are likely to notice, but can cut down on waste and outlay.
   • If you have a loyalty program, see how much it is costing you. Loyalty programs are often very effective for, well, generating customer loyalty, but don’t shoot yourself in the foot.  Consider putting a dollar limit on redemptions (you don’t want to end up giving away a $50 meal for every 10 $5 ones).  Also consider offering free drinks or appetizers at a lower accumulation point – people are often eager to redeem rewards as soon as they can and won’t wait for the bigger ticket items later when they can get something for free now.
   • Even though water may not cost a lot, it does cost something, especially when you add in ice, dishwashing, etc. Consider bringing out water only when customers order it.  With the prevalence of climate change and water shortages, this can even be a selling point for your establishment – you’ve probably seen those little cards at some restaurants explaining that, as a help to the environment they will bring water only on request.  With the rising popularity of sustainable and conscious living, and the rapidly increasing buying power of the young generations driving that popularity, chances are you will win more points with such an approach than you will lose.

4. Inventory

   • Know exactly what is and what should be in your inventory at all times. Have a clear idea of how much of certain ingredients are required for a given number of prepared meals and make sure that someone is accountable for loss. In the food industry, this can cut down on waste and can be helpful in identify theft and waste in any industry.
   • Be specific in the kitchen. Measure portions, figure out how much each is costing you, and make sure to price meals accordingly. You also want to ensure that portion sizes are consistent across locations and across shifts.  As the FDA begins to enforce (and probably expand) regulations on posting nutritional information, this consistency will be needed to provide accurate information anyhow.
   • Take a look at your menu and sales. Are there certain items you keep on hand in order to make dishes that people rarely order?  Maybe take those dishes off the menu.  Do you have a stockpile of a certain item, maybe a particular kind of liquor or several bottles of a less popular sauce? Try to figure out some way to use them up.  Make a promotion out of it.  Even if you only break even, you might increase other sales and you at least get excess inventory out of your way.

5. Vendors

   • Be loyal. Working with a few trusted vendors can really pay off in the long run.  Besides saving time bouncing from vendor to vendor trying to find the best deal, you are less likely to be cheated and more likely to be given a deal when you really need it, like when times are tough.  A trusted vendor may even be willing to match prices on certain items once you have established a relationship.  Plus, the more you are able to get from a single vendor, the fewer delivery fees you will end up paying.
   • Consider a co-op. Everyone knows that the more you buy, the lower the cost per unit. In many places, owners of smaller restaurants are banding together to make single large purchases from vendors in order to benefit from bulk pricing.  It may be worth it to find out if there is a purchasing cooperative in your area.
   • Explore refurbished equipment. Restaurant equipment in expensive.  Often, you can save hundreds of dollars by purchasing equipment that has been refurbished.  If you get them from the right vendor, these are often as good as new and should come with a warranty, just like any other piece of equipment.  This is also something to consider for décor. Vintage and industrial looks are all the rage these days.  Sometimes another restaurant’s garbage can be turned into chic furnishing with a little paint or varnish.
   • Cut down on deliveries. Are there items you get in your store that don’t need to be delivered fresh every day?    Take a look at your sales and inventory and figure out how much you need for, say, two days or a week.  You can cut your delivery fees in half or more by doing a few simple calculations that you should be doing anyway to keep up with your inventory and costs.