How to Reduce Restaurant Expenses

How to reduce restaurant expenses

Running a restaurant can be a costly affair. It is common for restaurateurs to overlook expensive holes in their system that can oftentimes easily be fixed. Whether you are just about to open your own restaurant, or you are already running one, this article is for you. Here you’ll learn how to reduce your operating costs, save money and maximize your profit margins without altering your customer’s experience.

What will be covered in this article

Saving costs in the gastronomy business is vital if you want your restaurant to survive and thrive. There isn’t a wrong time to cut back on extra costs and save money in your business. In good and bad times alike, awareness of your finances will always be an important factor for the success of your restaurant.

With all the fixed expenses connected with running a restaurant, it can be overwhelming to try thinking of ways to save costs without raising the prices on your menu. That’s why we created a list of cost saving ideas and strategies for you.

  1. Saving food costs
  2. Saving labor costs
  3. Strategies for saving other operational costs
  4. Focusing on teamwork
  5. FAQ - How to reduce restaurant expenses
How to Reduce Food Costs

1. saving food costs 

Inventory of most used ingredients

1.1 Take a daily inventory of your most used ingredients

Let’s start with looking at your most popular ingredients. 

What are the top ten items you use all the time in the kitchen that make up most of your food costs? Identify them and put them on a list. Then, keep a daily inventory of these foods.

Check each morning of a workday how much of each ingredient you have. Then check again in the evening to see how much of each item has been used. This will help you see if you are overproportioning or if you have excess inventory that can be reduced.

Buy local, cook seasonal

1.2 Buy local and cook seasonal

Finding a local supplier to source your ingredients from can be a game-changer for your budget while adding to the quality of your food. It can also keep your delivery fees for ingredients low. Check and compare your local suppliers to get the best quality for the lowest possible price.

If you buy locally, chances are that you will want to cook seasonally as well. Going with the flow of the seasons will not only save you food costs, but it will also keep your menu interesting and fresh with timely specials and changes.
Strategies to avoid food waste

1.3 Find strategies to avoid food waste

There are numerous ways to avoid food waste. These strategies not only help you make the most of your ingredients but also save you costs for your gastronomy business.

Pre-portioning

For example, you can avoid food waste by using the right portion sizes. Examine how much food gets thrown away from your customers’ plates and re-examine your portion sizes if needed. Pre-Portioning your ingredients for each menu item is also a helpful way to avoid your staff using excess ingredients when the time pressure rises during rush hours.

Use food scraps

Furthermore, you can also use your cooking scraps in creative ways to make more sellable items without wasting food or expanding your ingredient inventory. For example, instead of wasting older fruits and vegetables because they don’t look appealing anymore, use them up in smoothies or soups. With many health- and environmentally conscious customers today, this money and resource saving habit could even be implemented into your marketing strategy.

Simplify supply chain

1.4 Simplify your supply chain

Buying your ingredients and whole foods from different vendors can keep the cost of each item higher than buying from one vendor. It can also add up your delivery fees to unnecessarily high costs.

Consider which ingredients you need on a regular basis and seek out a local vendor that offers most or all of them. Buying from one source primarily will:

  • save you time in placing orders
  • save you money in delivery costs
  • help you negotiate lower prices through prime vendor agreements and buying in bulk.
Adjusting restaurant menu

1.5 Examine and adjust your menu

Examine your menu closely to see if there are any items that don’t sell well or don’t fit into your style and theme. You don’t need a very long or diverse menu. If your restaurant specializes in barista coffee and baked goods, your customers won’t expect you to have Vietnamese lunch options. A smaller menu list sets the tone for your restaurant and helps guests decide on what they want much faster. This will eliminate decision fatigue and enhance your overall customer experience.

Also see which foods on your menu you can make from scratch and which ones you should buy pre-made to save money and time. Foods that are very labor-intensive like extravagant cakes or baking goods can save you time and money when buying them pre-made. Simple foods with recipes that are low in cost and labor can be made from scratch instead.

Try to use the same ingredients across your list of foods and work cooking scraps or leftovers into special daily offerings, for example using old bread for croutons or old bananas for banana bread.
Calculate your food costs

1.6 Calculate your food cost percentage

If the prices on your menu are too low, you will lose a lot of potential income. Therefore, calculate your food cost percentage to figure out how much you spend on ingredients compared to how much you charge for each item on your menu. For a gross revenue of 75 to 80% per item, your ingredient cost should be somewhere between 15 and 30% of your charging price.
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Tips to Reduce Restaurant Labor Costs

2. saving labor costs

How to schedule restaurant staff

2.1 Schedule your staff well

Unlike cutting the food costs, which you can do very radically, you have to be careful when finding the right balance for labor costs. You don’t want to pay more employees than you need, but you also don’t want to be too short on staff and overwork your team.

To make well-informed decisions on how you can schedule your staff to achieve maximum work efficiency, you should consider rush hours and slow times during the day and week. Then, adjust the number of working employees accordingly during these time frames. Automated staff scheduling software can help you save time in creating the perfect schedule for your team.
Defining restaurant opening hours

2.2 Reconsider your opening hours

If you find that for your specific type of restaurant, the mornings or evenings don’t bring as many customers, you should consider shortening your opening hours to save labor and utility costs.

This time doesn’t have to stay unproductive - on the contrary. You can use these extra hours to work on new marketing strategies or enhance your business in other ways. That way, you’ll still be productive while saving labor costs on days that don’t bring much revenue.
Cross-train restaurant staff

2.3 Cross-train your staff

Reduce your individual needs for staff by crossing over responsibilities.

Don’t do this arbitrarily. Think about smart ways to combine different roles within your restaurant team and train your staff accordingly. In this manner, every employee:

  • will enhance their skillset
  • feel prepared for their work
  • complete a wide variety of tasks.

Reduce employee turnover

2.4 Reduce employee turnover

The turnover rate in the gastronomy sector is very high.

Not only does this influence the atmosphere of your team in general, but it can also cost you as the restaurateurs a significant amount of money. The lost productivity, the rehiring process and training a new employee can add up to thousands of euros.

Therefore, make sure to find the right kind of employees from the beginning and keep them over long time periods with a pleasant working environment.

build a successful team
Learn more about how to hire and manage your employees in the most efficient way, according to your needs.
How to plan your staff
How to Reduce Operating Costs

3. strategies for saving other operational costs

How to Reduce Restaurant Operating Costs

3.1 Buy smart, not necessarily new

Buying the needed equipment for your kitchen can amount to very high costs if you buy everything brand new. You can save a great amount of money by simply buying cooking utensils and other kitchen equipment second hand.

The same goes for your interior design and decor. Try to find items at vintage markets, designer outlets or even at other restaurants or hotels that are renewing their interior style and have kitchen utensils, chairs, sofas, or decor items to give away for a comparably low price.

3.2 Be mindful of your energy use

This one should go without saying, but you would be surprised by how many people are mindful of energy use in their home while showing wasteful habits at their workplace. Take a close look at the way your staff uses energy in your restaurant. Train your team to only run a full dishwasher and unplug unused appliances. Also consider switching to more energy efficient lighting and appliances. Being mindful of these things can save you a lot of costs when the utility bills come in.

3.3 Automate manual tasks

There are many ways to simplify your manual tasks like scheduling, inventory tracking, doing payrolls for your staff and tracking sales to adjust your menu. You can save a lot of time by using a suitable software that helps your numbers stay accurate. If you find yourself spending a lot of time with these tasks and losing the overview with doing it manually, switching to the right software might be the right solution for you.

3.4 Use free marketing options

Good marketing doesn’t have to break the bank. In fact, you can outsource many free options to advertise your restaurant.

Run a frequently updated social media account for your restaurant where you share the newest seasonal offers and other exciting news. Another option is to host your own blog that people can read to get an idea of your style and menu before they visit you. If you are not the online type, take part in local events to maximize your reach the good old-fashioned way.

Teamwork Makes the Dream Work

4. focusing on teamwork

Restaurant teamwork
Last but certainly not least, you have to face the reality that saving costs in the gastronomy business is only achievable through teamwork. The success of many of our suggested measures are heavily dependent on your employees. Therefore, we encourage you to be very transparent about your cost saving goals and communicate them well to your staff. When it comes to saving energy, you want to have everyone on the same page. Noticing and rewarding your employees’ effort will motivate them to keep going strong with these habits.

These are our top tips on how to save costs in the gastronomy business. Customize them to your specific situation and you will reap rewarding results!
Frequently Asked Questions

5. faq -  how to reduce restaurant expenses

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