Jared DevMaintaining profitability is a daily challenge for restaurants everywhere, with one of the most effective ways of doing that controlling overheads. For any food provider, that usually means ensuring that ingredient costs are kept to a minimum along with other overheads, but there are dangers to this line of thinking.
Reducing ingredient and staff costs can become a race to the bottom, where only price matters, and at some point, on this journey, the quality of those ingredients and staff will begin to lower, resulting in a deterioration in the restaurant food output. This will be noticed by customers, and in a competitive market, can result in lower levels of repeat business, even reputational harm, which leads to revenue loss.
The key then, it to reduce costs without impacting the quality of the food being served. The question is, how can you accomplish that.
Know your current costs
This may seem like an obvious statement, but you would be surprised just how many embark on a cost saving exercise without knowing exactly how much they are spending right now. There are both manual and software options for calculating costs per menu item, and if you are using some restaurant management or POS solutions, they may have this built in as well, but make sure you know where you are starting from, before looking to control costs more effectively.
Choose your Suppliers Carefully
A key component in controlling costs for every restaurant is the choice of suppliers. Not only can prices differ significantly between different suppliers, but quality can too. Re-evaluate your choices for suppliers to find the best blend of value and quality.
Think about the number of suppliers too, you may be able to lower ingredient costs by consolidating your purchases to a smaller number of suppliers, obtaining discounts through increased volume.
Join a Group Purchasing Solution
For smaller restaurants it can be difficult to negotiate lower prices with suppliers, as you don’t have the volumes that give leverage. However, there is still a way to benefit from volume purchasing, and that is through a group purchase organization.
These groups combine the purchasing power of multiple restaurants to leverage lower overall prices and give you an advantage for all your food purchasing.
An alternative to this is to simply cut out the middle man and go direct to farmers. This may not be practical depending on your location, but if it is, you can see not only significant cost savings, but obtain fresher, higher quality produce. Building a business relationship with local farmers can open the door to new ingredients and menu possibilities too.
Prep Your own Ingredients
Staying with the ingredients, don’t buy pre-peeled or sliced fruit, chicken fillets and so on. Do the prep yourself. Not only will it lower costs, but you can maximize your stock use. You will find that you will get more from your fruit or chicken, with commercial prepping creating a lot of waste.
In addition, as a by product of this you can use chicken bones to create broth for instance, instead of buying in ready made packets. This will not only save money but be a tastier option for your customers too.
The savings are important, but it is the additional control that can help you ensure that food quality remains consistently high while you are lowering those costs.
Check Your Deliveries
Make sure that what is claimed as being delivered actually is. This is one area when mistakes can really cost you a lot of money, so don’t take anyone’s word. Ensure that you are getting the right quantities of ingredients every time.
Take regular Inventory Checks
If you can, do both daily and weekly inventory reports, not just to maintain awareness of inventory use, but through that, you can gain even more accurate understanding of your actual, rather than theoretical food costs.
A daily inventory report will show you exactly how much inventory has been used in a day, and from that, how much in terms of cost was used. You can compare that to earnings for the same period to better understand your profitability and refine your menu and pricing as a result.
Limit Your Menu
Finally, instead of offering a large menu choice, focus on the things you do exceptionally well. With a limited menu, you can refine the ingredient sourcing even more and streamline the preparation process to eliminate waste, giving you the best scenario for controlling costs and maintaining quality standards.
By following these steps, you can focus on quality food and keep costs under control. This benefits your customers with a superior dining experience, and helps you maintain profitability, which is crucial for your business’ future. These are all great habits to get into even when starting out, not only helping manage overheads, but provide better business practices overall, and will help you manage more effectively as the business grows.