There is a significantly large investment needed to start any business, especially a restaurant. However, there are certain restaurant costs you can cut down to ensure that your business generates profit without burning a hole in your pocket.
If you want to open a new restaurant, there might be many things that you feel the establishment requires. However, an effective cost-cutting strategy will allow you to stay within the budget and not get confused.
In this article, we provide you with a detailed list of restaurant costs that a new establishment should cut down upon.
Costs New Restaurants Must Cut On
1. Excess Inventory
Restaurants require a certain level of inventory to run properly. Nonetheless, many organizations overbuy, whether for convenience or because a nice price comes along.
Limiting the number of goods on hand to what is required will reduce waste and spoilage and help you with cost-cutting.
Spend some time assessing your inventory levels and determining how much you will actually consume between deliveries.
This is a common problem faced by most new restaurants because they are not aware of inventory management.
Place your order, plus a little extra for a safety net. Because there is a limited quantity accessible, having less inventory on hand tends to enable the personnel to perform a better job of handling and portioning out products.
2. A Menu Which Does Not Sell
Creating an exclusive food menu is a good idea, but not at your expense. This is one of the restaurant costs which you can save the most.
Most restaurateurs do this before putting an item on the menu or when they initially open their doors. However, it is critical to monitor these figures and recalculate them when necessary, especially when margins are thin.
Add up the costs of the ingredients in a given recipe to make these calculations. If the dish can be divided into multiple portions (such as soup or stew), divide the total cost by the number of servings.
Once you have this figure, compare it to your menu prices. Is there any item on your menu which is surpassing the daily food cost from your budget?
Try to find an alternative or remove it altogether. While this process can be time taking, it is an effective method for cost-cutting.
3. Expensive Interiors
It is common to splurge on the interiors when you start a new restaurant because you want to provide your customers with a cozy ambiance throughout the year.
However, this is one restaurant cost you can cut down upon if you smartly plan your interiors. For instance, a pizzeria interior does not need plush lounges and expensive wallpaper.
The upkeep of the interior will add to your costs later on and will become a liability rather than an asset.
Cost cutting in interiors is just as important as reducing food costs. Choose material that is easy to clean, stay away from expensive drapery and select a theme that is easy to execute so you don’t have to spend a fortune.
4. Kitchen Equipment
You might wonder how this is a restaurant cost that needs to be cut down but the truth is, that cutting down on kitchen equipment is essential.
Most people are not aware of the equipment they actually require and kitchen equipment which is an added expense.
For instance, a basic bakery equipment list would cover an oven, a walk-in freezer, stands, and mixers. But if your restaurant does not display the deserts, you don’t need a display freezer.
Get information about the kitchen equipment that you actually require and only then purchase it. You can even search for second-hand equipment for effective cost-cutting.
5. Cut Down On Your Liquor
You start a new restaurant and with that comes a swanky new bar. However, this is a restaurant cost which will burn more holes in your pocket than any other expense.
Let’s face it: it’s all too easy (and all too enticing) for staff to steal your liquor. Alcohol is the most expensive inventory that a restaurant has on hand, and is frequently purchased in bulk to decrease expenses or maintain a consistent supply.
However, unsecured bottles of alcohol at your restaurant might be a substantial source of lost revenues.
Even if you haven’t observed any missing booze, you should consider locking up all liquor, beer, and wine.
Request that bartenders bring all empty liquor bottles to the management rather than simply discarding them, and only give managers access to the alcohol supply room.
Maintain an alcohol inventory log and conduct a regular count of alcohol on hand — this will simplify the re-ordering process.management rather than simply discarding them, and only give managers access to the alcohol supply room.
When you start a new restaurant, the most important thing to keep in mind is that your restaurant needs to become a profitable establishment and not one that drains you of your funds.
The above mentioned restaurant costs, when effectively reduced, will ensure you stay afloat and become a successful business.
We hope this article was a helpful read. For more content like this, follow us on Instagram!