Costs - Restaurant Relief - Part 1

Managing Costs (Part 1)

With the volatility of food prices, demand to increase wages, and growing competition, controlling costs is becoming even more crucial. As the owner or manager your time is already spread thin, often times filling the roles of employees either to save money or because of staffing issues. By putting your attention to these matters you can increase profits without having to increase sales.

Your biggest expenses are your food cost, labor, and operation supplies.

Tackling food cost is a decision that can save you money today. As a consultant, this is the first area I look and I want to see a fully costed menu, product sales mix, order guides, and receipts from on the fly store purchases.

A fully costed menu is crucial. This allows you to know how much to charge per item as well as giving you the opportunity to focus on sales contests or servers suggestions. You will save a significantly more amount of money quickly and over time than the time, it would take for you to pay a professional to fully cost your menu. Once you have that information you can calculate what your theoretical food cost is. Theoretical food cost is based on your sales data and product mix from your POS. Taking your theoretical food cost and comparing it to your actual food cost will give you an idea of how much money you are losing in food. With prep, there is a natural percentage of waste, however, seeing the gap between actual and theoretical is only a starting point. Looking at your most expensive items and your one for one item will be the fastest way to find missing dollars. Creating certain systems (Part 3) will allow you to track these high costs and easily traceable items. Another system I will explore is ordering and inventory. There is crucial information in these two systems that can save you money immediately.

Labor costs are a mixture of math and courage. Courage in two ways; courage to staff for growing your business as well as not spending more at times you cannot afford. The courage to tell a staff member they cannot have more hours than you can afford. It is a difficult balance but one that takes communication and reason. For BOH staffing your flow of business and prep lists are the most important tools you can invest in. You simply do not need the same amount of labor hours before or after your peak business. Developing systems to maximize those times will allow you to afford all of the hours you need to execute at a high level for your guests during peak sales. FOH is very similar and it is important to remember that your team makes mostly tips, if you take advantage of their low wage by scheduling more employees than are needed they will make less money and be more frustrated. I have found scheduling in 15-minute increments to be the most effective strategy for balancing the restaurants need and the employees as well, it will go a long way in your culture (Part 2).

Operating supplies is a category that can sneak up on you quickly. Plateware, glassware, and chemicals are extremely expensive. The first thing that I do in a restaurant is identify how much each plate, glass, serving utensil, etc… costs. Then I educate the team on it. Your profit margins are so thin that one single broken glass can cost the profits of an entire table. There is no need to be angry at a team member for breaking something but it means more when they understand and know how much each one costs. A simple way to evaluate your chemical purchasing is to take inventory every 2 or 4 weeks. See how much you have on hand compared to how much you purchased during that time frame then adjust your pars. Any product sitting on your shelves represents what you could have spent somewhere else investing in your business.

To me as a restaurant operator, restaurant consultant, these three areas are the first plan of attack because finding money without needing to increase sales is the fastest way to increasing profits and allowing you the flexibility and freedom that comes with increased cash flow.

Thank you for reading Part 1! If you have any questions I am always available to you via direct messages and email! Do not hesitate to reach out.

Mike Thorp

mike thorp