Many restaurant owners are always looking for ways to reduce their operational costs. This is especially the case today, with the pandemic having an impact on every restaurant owner’s bottom line.
There are different ways to keep profit margins where they need to be. If you raise your prices to cover your costs, you could lose customers. However, if you reduce your operational costs, you will still have the profit margins you need to move forward. The key is to understand what your operating costs are and know how to reduce them.
Your operating costs are all of the expenses involved in running your business. This includes payroll, rent, utilities, supplies, inventory, and more. Some are fixed and stay the same, while others vary from month to month. You need to look at all of them to see where you can save. The following are six ways to reduce your operating costs.
1. Look at Your Food Costs
The operating costs on food make up between 20% and 40% of most restaurants’ cost. There can be significant room to save in this category. First consider where you purchase your food. Some restaurants buy from consumer grocery stores, which is much more expensive than using a food supplier.
When you use a food supplier, you will get discounts and pay wholesale prices, offering you significant savings. You can also work with local farmers because they may offer a discount if you place higher volume orders. If these items are organic, you can charge more because people are getting fresh, local food. Make sure that you include this in the description on the menu.
2. Automate Your Manual Processes
On average, the payroll in restaurants is about one third of its operating costs. One of the best ways to reduce this expense is by automating any manual processes that you can. Your employees will be more efficient, and they will be able to get more done in less time. You can automate tasks; you can change takeout to online orders and use software to send reminders to guests with reservations – and you can keep track of all of this on your tablet POS.
You can automate your inventory tracking, your accounting, and your scheduling. These are all tasks that take a lot of manpower and, when automated, will allow your employees to focus on customer service and making the best food possible.
3. Reduce Your Food Waste
Another great way to reduce your operating costs is to reduce your food waste. If you plan the menu independent of the food you have in stock, you can end up throwing away food before it is used. Look at what you have, and figure out how to use all of your food by creating a menu based on what you have in stock. Choose your specials based on what needs to be sold before it is no longer viable.
Another way to reduce your food waste and cut down on expenses is to purchase labour intensive foods premade. This includes baked goods, French fries, sauces, and other similar foods. Even if the food costs are lower when you prepare these foods in house, they are higher when you factor in the labour required to prepare them.
4. Use Inventory Management Software
One of the best ways to reduce your operating costs is to use inventory management software. It will help you keep track of all of your supplies, including your food. You will be able to order what you need when you need it rather than estimating. The end result is that you will have less food spoil and go unused. Some software programmes even allow you to keep track of prices from food suppliers.
You would be surprised at how much time you save once you automate the entire stock management process. Using this software helps you run your restaurant more efficiently and it can seamlessly integrate into your tablet POS.
5. Try Employee Scheduling Software
Another place where restaurants spend extra money is in scheduling employees for work. If you are basing your scheduling on what you think will happen, you are likely to under or over schedule. You may not remember who will get overtime and who needs to be there. However, when you use data for scheduling, there is less room for human error.
It will keep track of data by looking at a number of factors, from historical sales to reservations and weather forecasts. It will save you time because you can basically automate scheduling rather than spend a great deal of time trying to figure out how to schedule for the following week.
6. Lower Your Employee Turnover Rates
You may not realise it, but employee turnover has a significant cost. Every time an employee leaves, you need to find people to cover for them until you can hire someone new and complete training. Turnover can be very high in the restaurant industry, with the average rate being around 73%. Anything that you can do to lower this number will reduce your operating costs.
Focus on being more selective when you hire, and provide opportunities for employees to get a promotion. You should also make sure that you have a competitive compensation scheme and be flexible about schedules. When people are happy at work, they are far less likely to leave and work somewhere else. Show your employees that you value them so that they stick around.
Focus on the Bigger Picture
One of the best ways to increase your profit margins in the restaurant business is by reducing your operating costs. When you run your restaurant more efficiently, you will save both time and money. From self-ordering kiosks to a tablet POS, there are a lot of software tools that you can use to make this happen.
You can automate time-consuming manual tasks and let your employees focus on what can’t be automated: making customers happy. Customers want outstanding service and excellent food. Not only does automation help your business run more efficiently, but your employees will be happier, which will result in less turnover. At the end of the day, all of these factors will have a positive impact on your bottom line!