Blog: Strategies on how to reduce costs in your restaurant
As the challenges of today's economic climate continue to shape the way we operate, it's never been more important to find new ways to cut business costs. While some costs, such as rent, are fixed by external suppliers and can't be lowered, there are several ways you can bring down some of the operating costs in your business.
Here at Access Hospitality, we talk to customers every day who are looking to find ways to cut costs without compromising on the quality of their offer. We help find ways to digitise and automate processes to gain the insight and visibility that businesses need to action change.
In this article, we look at some of the biggest cost-driving areas of businesses in hospitality and reveal the tools and tricks to reduce those costs., as well as some practical tips you can implement straight away.
How do restaurants reduce operating costs?
Many operating costs are fixed by external suppliers and therefore there isn’t much you can do to bring the day-to-day costs and expenses of running your restaurant down. Energy bills, food and drink, rent – these are all costs and expenses that are not determined by the restaurant operator.
There are, however, several ways you can bring down operating costs for your business by looking at the internal functions, hardware and software in place and where you could streamline processes.
Find out some ways to reduce costs in your business:
Ways to reduce food costs in your restaurant or hospitality business
Reducing food costs starts with monitoring and tracking your inventory and continues with careful analysis of purchasing decisions, portion control and waste reduction measures. By regularly monitoring and recording changes in inventory levels, purchasing patterns, and usage, you can make informed decisions to optimise your menu, negotiate better deals with suppliers, and implement portion control measures.
Consider implementing food waste management software to streamline these processes and gain deeper insights into your food cost management. Technology makes it easy to monitor and understand the costs, usage and waste so you can get a better handle on the situation.
Consider food prep time
Another mistake hospitality operators often make is not considering preparation time. Every second that chefs spend preparing a recipe is a direct cost and needs to be calculated for every recipe.
All of this can be incredibly time-consuming to work through manually, but there are menu management and recipe costing solutions that can help.
Using tech to help with menu engineering
Access Procure Wizard’s recipe and menu engineering module enables operators to analyse cost, waste, sales and profitability when creating menus and recipes so that budgets and targets are achieved and dishes that are not selling can be removed from the menu.
The system interacts with the purchase-to-pay module which eliminates the need to manually update data because the supplier uploads all products and price files and you can see immediately what’s actively changed and what impact it will have on your business. If the cost price to the menu price is no longer viable, you can reject the change and leave a comment for the supplier.
When it comes to product management, technology is all about having the ability to control and maximise the profitability of every product you use via one system. Our customers typically report a 3-5% increase in gross margins, with savings in the range of 5-15% through waste and direct cost savings.
Some more tips for minimising food waste:
- Maintaining a strong inventory management process
- Trim down portion sizes of any dishes where waste is a frequent occurrence
- Offer a menu with plenty of variety but which isn’t so extensive that you have to hold high levels of stock
- Use a stock rotation process that ensures the oldest produce is used first so that it doesn’t go off
- Don’t order more stock than you are realistically going to need
- Provide small portions of ketchup, mayonnaise etc rather than offering full bottles or large pots that could encourage waste
- Reschedule deliveries away from busy service times to avoid being hurried and signing off without checking the order properly and possibly accepting under-orders or spoiled products. It is also good practice to use order tracking tools and weigh any loose deliveries
How to reduce your energy bills in your restaurant or hospitality business
Rising energy costs are a huge problem for hospitality operators with pub and restaurant operators reporting an average 41% increase in energy bills*. There are some very effective, quick things you can do to help reduce your bills but making sure everyone in the business is informed and implementing these practices is essential for making an impact.
Staff training
Refreshing staff training can help with reaffirming good business practices such as keeping doors to temperature-controlled areas closed when not in use, such as the fridge, freezer and cellar. Revisiting appropriate staff training, such as basic drinks service to reduce beer spillage and overpours of other drinks, or plating up food according to the portion size stipulated in menu specifications can also help reduce associated costs.
Reducing temperatures
Many of our customers find a good energy-saving tip is to reduce the temperature of their dining room - if it’s possible to do so without affecting the guest experience. Clever use of candles and soft furnishings can make a space feel cosier and turning down your thermostat by 1°C could generate a saving of as much as 10%.
Keeping up to date with maintenance
And don’t forget about your building and equipment costs when it comes to reducing bills, regular servicing and monitoring of warranty periods can significantly increase the life of your assets as well as have them cost less to run or heat.
Some more tips for reducing energy bills:
- Make sure that heating, lighting and hot water systems are only switched on when needed, especially in low-traffic areas by using sensors and automatic timers
- When upgrading appliances make sure you choose the most energy-efficient model over the cheapest
- Don’t neglect maintenance of equipment as this could not only cost more to run but could cause costly breakdowns or require expensive replacements
- Get that dripping pipe fixed and unplug appliances that are not being used
- If you haven’t already, replace bulbs with LED or fluorescent strip lighting
- Regularly clean and maintain ventilation units and fans to ensure that blades and grills don’t get blocked as this could increase running costs by up to 40% and servicing a boiler regularly could reduce its running costs by approximately 10%
- Investigate whether insulation could make a difference to your energy costs, particularly in the cellar
- Regularly check refrigeration displays, not only for health and hygiene regulations but because an inaccuracy of +1°c could add up to 4% to your running costs
How to optimise your staff schedule
One of the biggest costs any hospitality business has is labour. It is crucial to optimise your staff, ensuring you have the right amount of people working at the right time to complete the tasks at hand. Too few and customer service suffers, too many and your profit is impacted.
Automating processes
You could also think about automating processes that are time-consuming for staff, such as updating nominal codes, chasing suppliers for details on statements, cross-matching products, or keying in invoices. When automated, the reduction in labour time equates to an average of £1.2k saving per £100k of spend. Operators can then re-allocate those hours more efficiently, further increasing business performance.
Some more tips for optimising staff scheduling:
- Look at your year-by-year sales reports to identify peak business trends
- Be aware of upcoming events such as Pride or local sporting events
- Pay attention to the weather forecast, if it is going to be hot and sunny and you have an outdoor terrace, you’ll want the maximum number of staff working that day
- Automate staff scheduling processes to help you accurately report on your wages against forecasted sales and ensure you maximise wage cost efficiency
- Respect your people and treat them well to keep a balanced, skilled, happy and motivated team that not only creates a great working environment and enthusiastic team but also avoids costs associated with recruitment and onboarding
Find out more about how sales forecasting can help with staff scheduling >
Reducing operational costs
Whilst we cannot control the increase in prices directly, it is possible to focus on some key operational areas whereby making incremental changes through the use of the right technology can have a positive impact on reducing costs and increasing your gross profit.
Reducing temperatures
Many of our customers find that a good energy-saving tip is to reduce the temperature of their dining room without affecting the guest experience. Clever use of candles and soft furnishings can make a space feel cosier and turning down your thermostat by 1°C could generate a saving of as much as 10%.
Keeping up to date with maintenance
Implementing checks and tasks around expensive equipment helps to minimise damage and costs. By doing so, any issues can be dealt with swiftly before they become bigger problems with even bigger associated costs.
Paper vs Digital Costs
Did you know that printing a ream of paper costs around £32.50 every month? Alongside storage and stationary costs, sticking with paper comes at a significant price. As well as the costs and the environmental impact, maintaining paper documents in a busy hospitality business also risks slow productivity and the potential for mistakes.
Save costs (and time) on audits
Keeping digital records is an effective way to save time and money when carrying out internal audits. All records are saved centrally, giving you oversight and quick access to any data relevant to the audit. Having these records stored digitally also simplifies the process in the event of an external audit.
Ready to reduce costs in your business?
The cost of living crisis and soaring rates of inflation mean that controlling costs will be key to hospitality operators' longevity, therefore it is advisable to explore all areas in which they can reduce unnecessary waste, helping to protect their bottom line. It doesn’t have to be an over-complicated task, and there are many simple steps that you can take using technology which helps streamline services.
Some more tips on how to reduce costs in your hospitality business:
- Check if you are eligible for any grants, rebates, rate reductions etc. and, if you are, get an application in as soon as possible
- Reduce paper and printing costs by digitising processes
- Use the wealth of business data and analytical reports that technology provides for every aspect of your operation to help you plan and execute activity more efficiently
- Use sales forecasting techniques to make sure that staff rotas are flexible and efficient to respond to the busiest trading periods
In this article, we’ve looked at some of the small, purposeful changes you can make to your menu, the impact of having the right staff working at the right times and how to ensure you manage food waste carefully to reduce costs in your business.
For more tips and resources on how you could reduce your operational costs, please visit our Controlling Costs in hospitality hub.
Our software solutions help optimise and digitise processes and collect valuable data that can shed light on the areas that are costing you money unnecessarily. If you're interested in learning more about how technology can benefit your business, we encourage you to speak with one of our representatives today.