Restaurant Cost Control Guide: Tips and Techniques for Success

As a restaurant owner, you’re constantly challenged with the task of keeping costs in check. Expenses related to food, labour, and overhead can have a significant impact on your profits. But fear not! The restaurant cost control guide is here to help you through some effective strategies for controlling costs every step of the way, from purchasing ingredients to serving up delicious dishes.

We will dive into various food cost control methods for controlling food costs, such as reducing kitchen waste, managing portion sizes, and ensuring your staffing levels are optimized. Additionally, we will share tips on how to cut down on expenses for supplies, streamline your processes, and make the most out of technology to improve your restaurant management.

Understanding Your Restaurant’s Cost Structure

Understanding where your restaurant’s money goes is step one in managing your finances. Here’s a breakdown of the different costs you will run into:

1. Food Costs: These are the expenses associated with purchasing ingredients and inventory for your dishes. By keeping a close eye on your food costs, you can ensure that you’re getting the best value for your money without compromising on the quality of your menu offerings.
2. Labour Costs: Your staff is the backbone of your restaurant, but labour costs can quickly add up. This category includes wages for chefs, servers, cleaners, and other employees. By optimizing your staffing levels and productivity, you can control labour costs while maintaining excellent service standards.
3. Other Costs: In addition to food and labour, there are various other expenses you’ll need to manage. These may include rent, utilities, insurance, and equipment maintenance. By understanding and controlling these overhead costs, you can improve your restaurant’s financial health.

To help you with cost control in restaurants, consider using a restaurant cost control guide template or a restaurant cost control excel sheet. These tools can provide a structured approach to tracking expenses and identifying areas for improvement.

Tracking Your Food Costs and Setting Targets

Calculate Your Food Cost Percentage

Let’s talk about something important: your food cost percentage. It’s basically about how much you’re spending on food compared to what you’re making. For most restaurants, you want to aim for about 30-35%. If you’re spending more, it’s time to figure out why and make some changes.

Set a Target and Monitor Regularly

Once you know your food cost percentage, set a goal to hit that target. Check in every month to see how you’re doing. If you’re off track, just adjust your menu prices, portion sizes, or how you handle leftovers. Even a small tweak can make a big difference in restaurant cost management.

Manage Waste and Control Portion Sizes

Two big ways to save money: don’t waste food and serve the right portion sizes. Keep an eye on how much food you’re throwing out each week. And make sure your portions are not too big. Too much waste or oversized servings can hurt your profits. Effective cost control in restaurant operations involves minimizing waste and optimizing portion control.

Negotiate with Suppliers

Talk to your vendors and see if you can negotiate a better deal. Look around various markets and don’t be afraid to ask for discounts. Consider establishing long-term partnerships with reliable suppliers who offer competitive prices. Shopping around and comparing prices from different vendors can help you find the best deals. Even a tiny saving on your most-used ingredients can add up.

Managing Labor Costs Effectively

As a restaurant owner, your employees are your biggest asset, but labor costs are also typically your largest expense. Finding the right balance between the two is key to running an efficient operation. Here are some tips to keep labor costs in check:

Schedule Strategically

Create schedules that match customer traffic patterns. Have more staff on during your busiest times, like weekends and evenings, and cut back during slower periods like weekday mornings. Only schedule the minimum number of staff needed to operate smoothly. Cross-train your employees so they can fill in where needed. For example, train servers to host or bartend and vice versa. This makes it easier to cut staff when traffic is slow without impacting service.

Monitor Productivity

Closely monitor how productive your staff are to ensure maximum efficiency. Steps taken per hour and minutes between tables turning are good metrics for servers and hosts. For kitchen staff, track ticket times and items per hour. If productivity seems low, see if there are any obstacles you can remove or provide additional training.

Keep records of sales per employee hour to determine how much revenue each employee generates. A good target is 2 to 3 times the employee’s hourly wage in sales. Use this metric to make staffing adjustments as needed. Managing labor costs is an ongoing task. Keep analyzing your numbers and making small adjustments to work as efficiently as possible. When labor costs are in check, you can maintain good service and still make money.

Controlling Operating Expenses

Your operating cost can be anything from the electricity bill, cleaning cost, expense on inventory wastage, water bills, etc. Even though it can be hard to control these costs because a large part of them are followed by industry standards, there are ways you can reduce how much you spend.

Food and Beverage

Keep a close eye on how much food and drink you’re using and find ways to cut down on waste. Use specials to sell extra stock and get the best prices from your suppliers. Decide on serving sizes for all your menu items and educate your staff on the same. Train your bartenders to measure every drink to save money. These little changes can really add up and save you money in the long run.

Utilities

Saving money on utilities is easier than you might think. Just remember to turn off kitchen equipment, lights, and electronics when you’re not using them. Energy Star appliances are a smart choice because they use less energy. Also, consider turning down the thermostat in the dining area when you’re closed, and ask your landlord about sub-metering to only pay for what you actually use. Every penny you save on utilities goes right into your pocket.

Tips to Minimize Waste and Theft

Controlling costs isn’t just about the big expenses; it’s also about cutting down on waste and preventing theft. 

Monitor Your Inventory Daily

Make it a habit to check your inventory every day. This helps ensure that nothing mysteriously disappears. Keep track of what you have on hand versus what you should have based on usage and deliveries. If you notice any significant differences, it could be a sign of theft or wastage. Take the time to inspect storage areas, refrigerators, and prep stations regularly. The sooner you catch any issues, the less money you’ll end up losing. Utilizing a strong restaurant inventory management system can significantly enhance this process.

Standardize Portion Sizes

Make sure all menu items have consistent portion sizes and train your staff to stick to them. Large portions lead to wasted food and lower profits. Provide visual aids like portion scoops and tongs to help cooks and servers identify the correct sizes. Before serving, double-check plates to ensure portions are correct.

Tightly Control Access to Storage Areas

Only authorized staff should be allowed in storage areas, walk-ins, and prep areas. Keep doors locked when not in use and limit the number of keys distributed. Ask delivery drivers to check in so you can monitor who enters and exits. Restricting access reduces the chance of theft.

Clearly Communicate with Staff

Educate your staff about the impact of waste and theft on the restaurant’s success. Explain your policies and procedures thoroughly, including consequences for violations. Let employees know about routine checks and audits. When they understand the reasons behind rules, they’re more likely to follow them. Encourage anonymous reporting of issues to develop a culture of openness.

In the restaurant business, high costs and small profits don’t have to be the norm. By planning well and being disciplined, you can make sure your restaurant stays profitable. Pay attention to your money, find ways to spend less, and celebrate when you use resources efficiently. When you buy things, be smart about it to save as much as possible. Even small savings can make a big difference in the end. Implementing a robust restaurant POS system can also help streamline operations and improve cost control.

FAQs

1. What is a restaurant cost control Guide?
   The restaurant cost control guide is about managing expenses wisely to maximize profits while maintaining quality. It includes careful monitoring of spending on things like food and staff, reducing waste, negotiating good prices with suppliers, and ensuring portion sizes are appropriate. The aim is to operate the restaurant efficiently and generate profit.
2. How do you control your food cost?
   Controlling food costs involves several strategies. Monitor inventory regularly to avoid overstocking or shortages. Minimize waste by using ingredients efficiently and training staff on portion control. Negotiate with suppliers for better prices and quality. Analyze menu performance to focus on high-profit items. Implementing these tactics helps manage food costs effectively while maintaining quality standards.
3. What is the formula for food cost control?
   The formula for food cost control is Food Cost Percentage = (Cost of Food Sold ÷ Total Revenue) x 100. This formula helps you figure out how much of your total revenue is spent on food. It’s useful for making decisions to keep costs in check and ensure the business stays financially healthy.