6 clever ways to cut cost at your restaurant

Written by Joerg Schmikale | 18 May 2016

6 clever ways to cut cost at your restaurant Restaurant operators survive on slim margins, and cost cuts are an unpleasant but often necessary part of the work. There are, however, smart strategies to save a buck, and then there are bad ones, which may save you some money in the short term, but will be counterproductive in the long run. It’s sometimes hard to know what will bring some savings without jeopardizing your reputation. We have spoken to operators in the industry, and here are six of the best suggestions we have come across to either cut costs or help increase orders:

1. Fewer vendors, fewer deliveries

Every delivery you receive has an attached cost. A smart way to save money is to get fewer deliveries, from as small as possible a number of vendors. Order large amounts of food less frequently, and on top of saving on delivery costs you may be able to get a discount for buying in bulk. Fewer vendors also means fewer invoices you will have to deal with – which translates into quicker, less costly accounting. Remember to always pay your bills with vendors timely: you will be in a stronger position to bargain deals.

2. Save everywhere possible

We don’t recommend reducing the size or quality of your dishes; although common, it’s a very unpopular way of cutting costs. But what about all the rest? An expert in restaurant money-saving strategies suggests that reducing the size of the lemon wedges used to garnish drinks can bring about great savings – with little to no change to the quality of the beverage. Are there any other food items you use as garnish that you could downsize? It’s not just about the food, though. Are you using individually wrapped portions of salt, pepper and sugar? Do you hand customers wrapped straws? You can save money on all these items by using bulk dispensers instead of individually packaged items. If you operate a takeout service, you can reduce your costs sensibly reducing product packaging. Go easy on the free napkins in each bag. Don’t give extra salt, pepper, sugar and creamer unless customers ask for it. Don’t buy expensive printed plastic bags: you can use brown paper bags and stamp them with your logo. Buy used when you can. You can find great deals on used equipment to substitute broken kitchen appliances. Many of these changes will not only save you money, but also make you look more environmentally conscious, which never hurts. Telling customers to “Take only one napkin – Think of the environment” sure sounds (and works) better than saying “Take only one napkin, they are expensive”.

3. Follow the seasons

Seasonal ingredients are not just flavorsome, fresh and juicy: they are also a great way to save some money. Take full advantage of the freshest (and most inexpensive) vegetables and herbs by creating seasonal menus, which change every few weeks. The varied menu will also help attract more customers. Tweak your recipes based on seasonality and you will ensure delicious meals, with the added bonus of keeping your ingredient costs under control.

4. Slash unpopular dishes

Too many restaurants make the mistake of running very large menus. Although the pressure from customers to include certain items can be high, keeping too many dishes is a bad mistake. A menu with too many items ends up being confusing; you can’t create a cohesive brand if you offer a mix of everything. Better to stick to a few key specialties, and maintain a clear identity. When producing many dishes it’s hard to maintain the same quality level across them all. You will build a better reputation if you stick to few dishes, and cook them very well. Most importantly, large menus are money pits which make you lose money in at least three different ways.
  • To start, if you have too many dishes on the menu customers will take longer to pick a dish and order – and for every extra minute that a table is occupied without ordering, you are losing money! Shorten your menu, make it easy and quick to order, and you will turn more tables.
  • Secondly, the more dishes you include in the menu, the more kitchen space you need. Think of how much kitchen space and equipment you have before you design your menu. If your cooking area is too small to manage, say, multiple dishes being sautéed at the same time, do not include them in your menu - you risk slowing down the service when multiple customers order them during rush hour.
  • Finally, the more dishes you include, the more inventory you need. Fresh food spoils very fast, so the larger your menu, the bigger the chunk of your margins that will end up in the garbage can at the end of the week.
To keep healthy margins, cut the least popular dishes from your menu, and keep only best sellers, and high profit items. How many dishes should you keep? Here’s a rule of thumb: researchers say that you should include no more than seven dishes per menu category.

5. Smart design your menu

Are you using your menu to its full potential? Matching colors and design to your brand image is necessary, but not sufficient. Follow these few simple menu design tricks to push the right items, and increase your margins:
  • Attract diners’ attention to your high profit items (expensive dishes with relatively low ingredient cost) by using bold type, different colors, and framing elements in boxes. Do not be afraid of using attractive drawings, or even pictures if they fit with your brand image.
  • Most researchers seem to agree that when diners read a menu, they start from the top-right corner. This “sweet spot” is the right placement for the items you most want to sell. Design your menu based on diners’ eye-scanning pattern: remember that what catches the eye first has great advantage over anything that is seen later.
  • Put high profit dishes next to very expensive ones; the first will appear inexpensive by comparison, and more diners will gravitate towards them.
  • Do not line up your items’ prices in a column. Although you may think it looks more elegant, when prices are tidily lined up diners tend to pick based on the cost, rather than the dish, and generally choose cheaper options.

6. Get help from your POS and management system

Are you using an old POS or management system? Start putting some funds aside for a new IT, you won’t regret it. Although new tech can be expensive, the cost pays itself back quickly. A new, integrated management system can bring about great cost cuts. Its tools can help you on many different fronts, from identifying and reducing waste, to streamlining your inventory and purchasing, to managing your staff efficiently. Add a mobile POS to the mix to speed up order-taking and payments, and turn more tables.   Do you have any other smart cost-cutting ideas? Give us a shout below. If you want to get more information about how a new POS and management system can help you increase your revenue, don’t hesitate to contact us: our hospitality experts will be happy to advise you.   [hubspot id="2"]