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Have you ever spent more than the budget you accounted for at your restaurant? You’re not alone. The restaurant industry is notorious for being riddled with unanticipated expenses such as losses due to mismanagement of inventory, overspending due to erratically priced raw materials from multiple vendors, frequent equipment failure, or even an unoptimized menu that ignored your item profitability versus its popularity.
But fortunately, there are solutions that you can implement to cut these recurring losses and keep your spending in check.
Let's look at a few such ideas that you can implement today:
1. Implement preventive maintenance scheduling to avoid equipment breakdowns and repair charges.
If it isn’t broken, don't fix it, is an old adage that we've all heard. Unfortunately, this is bad advice when it comes to restaurant-related equipment, assets, and systems. Preventive maintenance is always less expensive than reactive maintenance. It entails not only the more time-consuming professional maintenance work performed on a monthly and semi-annual basis but also the daily cleaning and upkeep of your equipment.
- You can easily schedule routine maintenance items for your HVAC system such as filter changes, seasonal tune-ups, and regular inspections using a maintenance management system to keep it running reliably.
- Sensor technology has improved in terms of performance and cost, making it an excellent investment for restaurants. A temperature sensor, for example, can be used on both freezer and refrigeration equipment, constantly monitoring these assets to ensure the safety of food products. An alert can be sent as soon as one of these key assets exceeds the acceptable temperature range. This enables you to address the critical maintenance item right away preventing repair cost.
- A good preventive maintenance routine will keep your fryers, ovens, microwaves, grills, and ice cream machines running smoothly. Begin by entering recommended maintenance, inspection, and cleaning tasks from your equipment's operating manuals into your maintenance software. Your system can then automatically schedule tasks on a regular basis to ensure that important maintenance items are not overlooked. It is then critical to remind and teach your back-of-house crew about the importance of preventive maintenance tasks.
2. Engineer your menu to ensure it is cost efficient.
Menu engineering is a framework for analyzing and optimizing restaurant menu pricing and design in order to create a more optimized menu. It entails classifying all menu items into one of four menu engineering categories based on their profitability and popularity. Then, you use that restaurant data in conjunction with menu psychology principles to redesign your menu design and content decisions.
- High Profitability and High Popularity:
These are high-profit, high-demand items. They're inexpensive to make, and your guests will devour them. Rather than experimenting with these menu items, stick with them and promote them in any way you can. Make sure they are prominently displayed on your menu.
- High Profitability and Low Popularity:
These are the menu items that are extremely profitable but difficult to sell. Investigate why they aren't selling — could they be better described or placed more prominently on your menu? Do you need to promote them more on social media? Or, perhaps, the price is a little too high — sometimes, simply lowering prices slightly can increase popularity enough to produce higher overall profits.
- Low Profitability and High Popularity:
These are popular menu items whose ingredients are on the pricey side. The goal with these plowhorses is to increase their profitability. How? You can rework the recipe to make a more profitable version of the same item, or pair it with a profit-boosting drink on your menu to create an exciting combo! You can also monitor portion size: Are these menu items being left on customers' plates? You may want to reduce the portion size slightly while improving the dish's appearance.
- Low Profitability and Low Popularity:
These are the items on your menu that are expensive to make but not well received by your guests. They're taking up space on your menu that could be used to increase your profits. Consider leaving out these dishes or de-emphasizing them by hiding them on the menu. You can also try rebranding and re-inventing the item before getting rid of it completely.
3. Schedule regular inventory reviews and keep the same in control.
Many restaurateurs admit to doing an inefficient job with inventory management or restaurant accounting; however, skilled management can help you significantly reduce your costs.
Let's look at some ways to manage your inventory to cut unnecessary expenses:
- By evaluating your inventory on a daily basis, you can quickly learn which items are being used more frequently than others. Similarly, whenever the prices of certain items rise, you can begin to promote lower-priced items. This not only aids in menu optimization but also reduces food costs. Depending on the same procurement of fresh items, this could also be practiced to avoid waste of raw materials.
- Use the first-in, first-out (FIFO) inventory method. Because restaurants rely on perishable goods, you should use the FIFO inventory method. That means you use the oldest food and supplies first. Place the oldest items in your storage areas in the front and make them easily accessible.
- Limit your purchases, especially when it comes to seasonal items because you only need those materials for a limited time. For example, during the winter, the sale of frozen drinks falls. As a result, avoid overstocking items that will take up a large portion of your shelf space.
4. Utilize a prime vendor to consolidate purchases.
Purchase consolidation is a significant cost-cutting strategy aimed at limiting expenditures during the inventory procurement process, and one of the key ways to do this is to stick to a single vendor. Restaurants can save money on inventory and relationship management by reducing the number of vendors involved in meeting consumer demands.
- Consolidating purchases enables businesses to place larger-volume orders from a single vendor or group of the same.
- Fewer vendors mean reduced shipping-related costs, as the deliveries come in from a single source. Hence, resulting in significant savings for the company.
- Companies that can devote more time to fewer vendors are able to develop stronger and more long-lasting relationships with their suppliers. Over time, this can result in improved cooperation between the two parties enabling you to procure items at a rate like nowhere else, cutting any extra expense.
5. Transition from regular to energy efficient equipment and solutions.
The continuous and vigorous use of energy-intensive commercial kitchen appliances is taxing on the electric bill. Despite the fact that other uses, such as refrigeration, have an impact on the bottom line, food preparation and heating or cooling are the largest consumers of electricity.
Understanding how to maximize efficiency and keep energy costs low is simpler than you might think with a few simple tips:
- Heating and cooling your restaurant is an unavoidable expense, but there are several things you can do to keep costs under control. Install a programmable thermostat for hands-on control, and have your system inspected and tuned up once a year. Filters should be checked and replaced on a regular basis. This extra bit of investment will go a long way in saving your energy expenses over the years.
- One of the most important things you can do to save money on utility bills is to replace incandescent light bulbs with energy-saving LED bulbs or compact fluorescent lamps (CFL). LED bulbs can last up to ten times longer than incandescent bulbs while also benefiting the environment by lowering greenhouse gas emissions. Another low-cost way to cut lighting costs is to use dimmers and occupancy sensors for better control and less waste.
- Water consumption reduction in a restaurant is largely dependent on vigilance and the right components. Installing low-flow aerators on hand-washing sinks and opting for spray valves with lesser volume are both options. Leaks are the leading cause of water waste and energy waste, with a single leak costing restaurants hundreds of dollars per year.