10 Dynamic Ways To Cut Operational Costs at Your Restaurant
Making more money from your business is essential to success in the long run. Whether you are planning to open a restaurant or trying to optimize the operations of your existing one, pondering upon strategies to cut operating costs cannot be avoided.
Increasing profits while cutting operational costs can help you invest in upgrades, maintain a good staff, and provide a better culinary experience for your customers, hence driving in more profits. This article provides some actionable restaurant cost control ideas to scale your business.
What Is Restaurant Cost Control?
Restaurant cost control is all about establishing realistic financial goals for maximising profits and eliminating all factors that stop you from achieving them. A restaurant owner compares the actual performance with the expected one to determine how to implement cost control.
Bear in mind that cost control is not always about cost-cutting. Many owners go for diminishing ingredient quality, reducing staff or marketing expenses. However, these eventually have a negative impact on customer experience.
10 Ways To Cut Restaurant Operational Costs
Cost control in restaurants is quite distinctive from cost-cutting and includes implementing thoughtful decisions without compromising on food quality, restaurant service, and guests’ experience.
Let’s explore the top ten ways to enable ethical cost control in restaurants.
1. Identify High-Cost, Low-Profit Menu Items
Deeply analyze all the items in your menu list, how much they cost, and whether they convert into profit. Many restaurants have dishes which cost more but don’t sell quite well. It’s best to replace those dishes with a new alternative which might bring you more profits.
2. Optimize Supply Chain
Many times, the complex nature of supply chain management makes restaurant owners skip analyzing it. However, it is crucial to identify gaps within the supply chain. Sticking to one provider instead of paying multiple fees to various suppliers is appropriate.
3. Manage Inventory Efficiently
Inventory management comes in handy to reduce restaurant operational costs. Stay updated with the ingredients already present to avoid re-ordering. A POS system with an integrated inventory management feature is helpful for this task.
4. Minimize Food Waste
Get creative in using ingredients so they don’t go to waste. For example, you can utilize slightly old bread for making croutons instead of serving it as a fresh one or throwing it away. However, make sure never to take risks with the customer’s health.
5. Reduce Employee Turnover
Employee turnover costs prove heavy not only on the pocket but also on the overall productivity of restaurant operations. Ensure that you make the right hire from the start. Provide growth opportunities, competitive payments, and a good work-life balance for your staff.
6. Automate Manual Processes
Automating manual processes is a good way to reduce restaurant operational costs. You can introduce online ordering, use self-service kiosks, and take the help of a reservation platform to send reservation reminders to your guests automatically.
7. Make Certain Foods From Scratch
Instead of making everything from market-bought, costly processed foods, consider investing some time in making low-labour foods in the restaurant. For example, the cost of flour, butter, sugar, and eggs combined will cost you less than that of pre-made cookies from the local bakery.
8. Buy Some Food Items Pre-Made
It is essential to understand how to cut food costs in restaurants. The above strategy is not implementable for all dishes. Some foods are cheaper when bought from the market compared to the cost of ingredients. Hence, it’s best to purchase pre-made or partially prepared foods like sauces, frozen french fries, and pasta to save money and time.
9. Lower the Utility Bills
A prominent way to reduce operating costs is to reduce the restaurant’s electricity and water bills. You can switch to LED light bulbs and energy-efficient appliances, which save money in the long run. Make sure to switch off lights overnight. You can also install motion-activated light switches.
10. Optimize Staff Scheduling
Payroll costs make up a large chunk of your operating expenses. Make data-backed decisions using scheduling software instead of relying on your gut feeling. Scheduling software automates scheduling and incorporates past data with upcoming reservations to save you from running into costly overtime.
Running Tight on Budgets? Deliko Can Ensure Cost Control in Your Restaurant.
The above-listed strategies will help you reduce the operational costs associated with your food service operations. However, we understand this is a lot to be kept in mind and implemented while considering everything at hand.
Deliko provides custom modern solutions to increase profits and reduce restaurant operational costs. Let us help you streamline your processes and boost customer engagement.
1. How can reducing operational costs benefit a restaurant?
Cost control in restaurants can increase profit margins, improve cash flow, and ensure better resource allocation. It also helps increase customer satisfaction, employee morale, and flexibility in operations and provides a competitive edge to the business.
2. How can the operational cost reduction strategies be implemented?
Operational cost control in restaurants can be implemented by deeply analysing how much you’re investing and the profit margins it’s giving you. Implement the strategies by monitoring inventory management, staff scheduling, utility bills, and supply chain management.
3. When to expect results from implementing cost reduction strategies in a restaurant?
The results of cost control in restaurants depend on the implemented strategies. It is also dependent on the unique circumstances of each restaurant. While some strategies could yield immediate results, others prove beneficial in the long run. It’s best to stay consistent with the cost-controlling process.
4. Which Deliko products can help reduce restaurant operating costs?
Deiko provides products that provide a ‘3i advantage’: intuitive, can be integrated with current systems, as well as intelligent solutions. The technology professionals are experienced in developing custom software to manage all your operations and scale your business. They range from cashless prepaid card management, table management, to automated business performance reporting. Explore our range of products to identify the best one for your business.
As a highly experienced thought leader in the hospitality industry, Suresh Kumar carries a unique combination of global experience and multi-industry specialty. With 15 years of experience as the marketing head and director of Lucid IT Solutions and seven years of directing sales at Pazo, Suresh has especially honed skills with F&B and restaurant POS — skills that make him an irreplaceable asset at Semnox. Now, he spearheads the realm of cafeteria management solutions through seamless business operations and collaborative development.