Managing the finances of the restaurant business has always been difficult. And post-Covid outbreak, handling restaurant costs has become even more tricky. It has changed drastically with changing pattern of consumption.
The way a restaurant structure its cost is detrimental to deciding its profit margins. It is thus essential to keep having a regular implementation of efficient strategies to check restaurant expenditure.
Ideas To Cut Down Your Restaurant Cost
Cutting down your restaurant cost is a difficult task. But laying out a schedule and planning a cost sheet of your expenses can genuinely bring down your expenditures and level up your profit. Below are some ideas that might help you.
1. Calculate your margin
First and foremost, break down your cost of expenditure, production, sales, and consumption and decide whether you are at a loss or a profit.
Compute your prime cost ratio to get a detailed picture of your financial situation. Knowing your prime cost ratio is very important as it holds the highest share of your total expenditure. Proper management of the prime cost ratio can therefore help you invest wisely.
Figuring out your commercials, in the beginning, will help you decide your future course of action.
2. Administer your supply chain
The supply chain manages goods, services, sales, and raw materials. It begins with effective planning and comprises retail, distribution, transportation, and everything related to raw materials until they reach customers. Therefore, supply chain management should be taken care of properly.
Avoiding any loophole in the chain can help towards lowering your purchase cost and in increasing your profit.
3. Frequently update the Menu
Optimizing your menu can bring down your restaurant cost significantly. Compare the preparation cost of your food items with the profit they bring. Identify the food items that cost you more than they return. Cutting down such food items will eventually cut down expenses.
The menu should also be checked regularly on the basis of customer preferences and the season. Choices of the customer and time of the year play an important role in determining what will sell on your menu.
Strategically updating your menu on a regular basis can definitely enrich your bottom line.
4. Reconsider your purchase pattern
Where you purchase and what you purchase are very divisive questions when it comes to restaurant cost management.
After analyzing your requirements and finances, you can check whether one-stop shopping suits you or multiple.
One-stop shopping is a method where you buy all your materials from a single supplier. It offers you a chance of getting a good discount as you order everything in bulk from a single place. Here is the one-stop solution for all restaurant supplies.
It might not be an option when you have to go to different suppliers for different requirements. So, assess your situation and choose accordingly. Irrespective of your number of suppliers, maintaining a good relationship with your suppliers is always advisable.
5. Look into your Inventory
Inventory is very crucial when it comes to a restaurant business. Your inventory can lead to heavy wastage and spoilage if not taken care of.
Many restaurateurs tend to fill their inventory with surplus stock. Going by this way is not a good idea as most of the material in an inventory may not be of use after a few months of purchase.
Checking and arranging your inventory frequently can save your wastage and consequently cut down your expenses. Manage your inventory on a real-time basis with a POS system.
6. Manage your staff
Staff management is a decisive factor in the restaurant business. A restaurant cannot function without it. Accordingly, it becomes important to manage how staff should operate.
The major concern in staff management is how much manpower you should hire as requirements of staff change with changing hours and occasions.
Accommodate your staff member as per the rush at various hours and seasons.
Training new staff members who work with you for a short time wastes your resources and time. Keep your staff happy so they work longer with you. This would save the unnecessary cost of training and could be used somewhere productive. Wondering about ways to lower your labor cost?
7. Cut down on decoration
The ambience of your restaurant attracts many customers as people these days like to get some good pictures when they visit new places. Using reusable decor can rescue you from spending unnecessarily on expensive decor.
Go for decoration that can be used again and try to pick decoration that can almost be adjusted for various occasions. For instance, using lighting instead flowers. Flowers dry up in a few days but bulbs, fairy lights, and alike materials can pull up your ambience on almost all occasions.
8. Keep a check on your wastage
In a restaurant, wastage can be observed in various ways. Firstly, a lot of food goes waste in chopping. For example, while making French Fries the top, bottom, and sides of a potato go to waste. The remains instead of going to waste can be used for a dish where potatoes are used in mashed form like in a samosa or in a paratha.
Secondly, a restaurant uses a lot of electricity. Switching off lights, fans, and appliances when not required can save up a lot on expenditure.
Thirdly, go digital. Choose a digital menu and reduce the use of paper unless and until necessary. It will save your printing cost.
Hope these ideas were helpful for you in deciding where and how to cut down your restaurant cost. Use a POS system with CRM technology to level down your restaurant cost without compromising your brand image and customer expectations.
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