9 Sureshot Ways to Cost Control in Your Restaurant

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For every business to flourish, cost-cutting is an important tool. And restaurants are no different. Cost-cutting or cost control in restaurants generally refers to the continuous process of reducing the unnecessary expenses that your business incurs to save utmost and increase profit.

Cost control in restaurants is further important as their profit margin is very slim, running somewhat between 3-5%. And with the standard costs of food and beverage items increasing rapidly, restaurants must focus on saving each and every penny.

And that’s exactly what I will help you do. 

In this blog, I bring to you 9 effective strategies by which you can save your hard-earned money and keep your restaurant costs in check. 

Tactics for Cost Control in Restaurants

With numerous nooks and corners to look after, cost-cutting strategies are often missed. And while accounting, you often find most of your expenses gone off the roof. 

Here are some easy-to-implement yet effective ways to check your restaurant expenses:

1. Reduce Food Wastage

Did you know on average, a high-end restaurant wastes about 75,000 pounds of food annually? Meaning, wasting a lot of money! Whereas trimming your food waste is actually very easy.  

Here are common methods of controlling food costs at your restaurant:

• FIFO Method: FIFO or First In First Out Method is a widely accepted model for saving food. As simple as it sounds, you make sure the raw materials/ingredients that were purchased first are used first. This process ensures that the old goods are used before they reach their expiry date and they don’t get wasted.
• Identify High-cost Low-cost Menus: Nearly all eateries have menus that are expensive to make but don’t sell well. These are the pain points you need to focus on. Bid them farewell and try including dishes that are cheaper to make yet you know customers will like or at least give them a try.
• Do the Math for Your Menu: Before curating the menu, do your math. Add up the costs of all the ingredients and resources in making a dish and then work on your profit margin to it. Ensure you keep updating the costs as per the price fluctuations of the raw materials.
• Portion Control: This is another way of food cost management. It simply means keeping the portions of a particular dish pre-restricted. It is often seen that the staff is over-generous and gives more than the assigned portion to guests. Keeping a strict measure over your portions not only saves food but in the long run, keeps your restaurant’s costs in control.

2. Staff Smartly

Staff is the second most important pillar of your restaurant after food. To control labor costs in your restaurant you need to train your staff efficiently and make sure they follow specific norms. From switching off appliances while not in use to keeping count of portions and covering tables, ensure your staff is all equipped. 

Overstaffing is another problem for restaurants that is often a major money waste. The easiest way to calculate this is to keep a note that you don’t have employees standing idly during rush hours. Try to minimize employee turnover as it takes a huge amount of resources to train and hire staff. 

Staff retention is a clever way of cost control in restaurants as it is costlier to hire and train a new employee. You can start by giving recognitions and appraisals, and providing a positive work culture at the workplace.

3. Go Digital 

Today, businesses across the world have shifted to digital modus operandi. And restaurants cannot fall behind. From accepting to delivering orders, restaurant operations are toilsome. Also, when done manually, it leaves room for error and most often consumes time.  

Investing in a smart and budget-friendly restaurant management system can not only save your hard-earned money but also simplifies your mundane, regular operations plus is a great idea for restaurant cost-cutting.

From automating your ordering to billing, streamlining online orders, and raising kitchen tickets, you can leave everything on a restaurant POS. Along with saving labor costs, it will ensure improved efficiency.

4. Minimizing The Number of Suppliers

One clever way to save on costs is settling for a single or a minimal number of suppliers. Sometimes it is seen that negotiating with suppliers often leads to multiple vendors for multiple ingredients but the cost summation often exceeds the incurred budget.

To prevent this, you can stay loyal to a single or a handful number of suppliers and practice one-stop shopping. A consolidated relationship with suppliers means you can bargain better and crack deals, especially for bulk orders, whereas new and multiple suppliers mean less loyalty as well as discounts – meaning fewer cost cuttings.  

5. Save on Utilities

Utilities are one of the most expensive investments for a restaurant – from decor to appliances like refrigerators and resources like electricity and water – all come under utilities. 

And as you can imagine, utilities consume a major portion of your restaurant’s expenditure. To cut these costs, you need to take one step at a time. What I mean is that you should focus on one utility at a time. 

For example, for decor, you can shift from fresh flowers to scented candles. While candles are a cheaper option, they can also be used as a way to save electricity when combined with dim lighting. 

For appliances and electronics, the best option is to go for pre-loved or second-hand gadgets. They come a whole lot cheaper than new ones and sometimes you get a very good deal out of them especially when you are starting. 

6. Watch Your Pours

Let’s be honest – alcohol is the most expensive inventory you have at your restaurant and are mostly stocked up at restaurants as in-bulk purchase comes at a good price. And most often, it’s not taken into account in your restaurant’s cost management, making it a significant way to lose profit. 

The best way to save it is to keep your liquor locked up. Be it expensive wine, beer, or any other drink. Keep the key with your manager and make sure you have a clear log of every single pour and not a bottle gets wasted or stolen. Make sure your bartenders and waiters keep and maintain a regular consumption record. 

7. Report Regularly

Another common reason for not being able to keep a check on your expenses is not keeping a track of them. Real-time reporting can be beneficial in saving your bucks. With regular monitoring and tracking of your income and expenditure, you can have a tight grip on your restaurant’s economy and find out the revenue leakage points. 

The purchase sales report is one such report that restaurants must have. Auditing it regularly or at least every fortnight will not only help you get a detailed sale analysis of your individual menu items but will also help you find out loopholes, if any, in your purchase-sales system. 

Though it might sound to be a strenuous task at first, trust me, daily or frequent in-depth reporting can prove to be financial help for your property. 

8. Sell Innovative To-go Items

One innovative way to gain some extra bucks is by selling some souvenirs or fun to-go items at your restaurant. This can be tricky, but let me explain it to you. These products can be as simple as selling toppings and pizza dough or bakery items to as fancy as customized chocolates, DIY cocktails, mocktail kits, chocolate corners, etc. To top it up, you can use branded paper bags for such items, to spread the word.

This is an extremely popular way to stay afloat, especially when you are struggling. Targeting customers visiting with their kids, these point-of-sale corners can help you get an extra push over your revenue. 

9. Control Internal Theft 

One of the major areas where a restaurant loses revenue that mostly goes unnoticed is pilferage and internal thefts. These thefts can occur at any point and most of the time due to lack of reporting, it goes overlooked – leading to rising costs and revenue loss. 

Internal thefts can range from stealing a liquor bottle to altering the number of sales that occurred on a particular day to keep the revenue generated for themselves. The easiest way to keep a check on this is by strictly monitoring your employees and maintaining a detailed report. A restaurant management software can also come to your aid as it will reduce manual labor and ensure there are minimum loopholes left for theft.