10 Cost Reduction Strategies In Restaurants Without Reducing Quality
The restaurant industry is one of the most competitive businesses out there. When costs rise, so do prices. When profits decline, so do quality and service. But there are ways to improve your profit margins without affecting the quality of service — and ways to save money when it comes to your restaurant's bottom line. You just have to know where to look for them!
Here are ten safe and smart cost reduction strategies that will increase your restaurant's profitability while keeping customers happy.
- Identify high-cost, low-profit items in your menu
- Optimize your supply chain
- Be mindful of customer food waste
- Let older ingredients do their magic to cut cost
- Streamline your menu
- Start Using a food cost calculator
- Deal with limited suppliers
- Pre-portion ingredients for menu items
- Seasonal ingredients will help you out
- Start using the FIFO method
How To Cut Food Costs in Restaurants?
We have to feed our staff and our customers every day. And if we don’t run a profitable restaurant, then there will be no business. The profitability of the restaurant depends primarily on cost control. In this article, I’m going to highlight several practical cost reduction ideas to help you reduce food cost in restaurants.
1. Identify high-cost, low-profit items in your menu
Every restaurant owner knows the struggle of choosing menu items that will generate profit. It is a tricky balance to keep your customer happy while also making ends meet, but it can be done. Here are some strategies for identifying high-cost, low-profit items in your menu and cutting down on costs:
- Review sales report from the past five years and find out which dishes have lower profit margins than others.
- Think about what ingredients cost more than others and adjust recipes accordingly.
- Increase prices gradually over time to avoid sticker shock.
Having a menu that is profitable and one with customer satisfaction are both important. It's just about finding the right balance of cost-effective items that will keep your customers coming back for more!
2. Optimize your supply chain
The cost of food is undeniably one of the most significant expenses for restaurants. Reducing food expenses of a restaurant is so vital that a reduction of only one percentage point can generate thousands of dollars each year. More than 30 percent of your income is already spent on buying food in restaurants. To cut costs, you need to optimize your supply chain.
By making sure your supply chain is steady, and your waste disposal methods are efficient, you can keep your costs down without sacrificing quality.
3. Be mindful of customer food waste
It’s not uncommon for food service establishments to regularly toss out leftover food. Many establishments think there is no point in saving it since they can’t be sure if it’s spoiled or not. But that’s precisely the point: Don’t let your lack of certainty about the food cause you to throw it away. Be smart about your portions and save more perishable foods last — and consider adding those savings back into the menu prices.
4. Let older ingredients do their magic to cut cost
Turning out fresh dishes every day is a matter of pride and quality for restaurateurs. However, as fast as ingredients appear at your restaurant — especially if you buy them fresh each morning — their shelf life can be short. Given the cost and effort of obtaining ingredients, it makes no sense to throw away delicious food because its date has passed. There are numerous ways to prolong the shelf life of fresh foods.
5. Streamline your menu
To a business owner or manager, the menu is one of the most critical aspects of the business. It’s like a pyramid: If you don’t have a solid foundation, you will definitely fall and fail. The menu is the foundation of your restaurant.
Short menus have a higher chance of increasing your overall sales and leaving your menu short and sweet guarantees that you and your kitchen staff stay focused on one or two signature items. It streamlines the process of creating an excellent dish and has a positive impact on your inventory management.
6. Start Using a food cost calculator
Food cost calculators are a great tool to help with inventory management and determine how much money is being made from food sales. If you’re not tracking your food costs, you could be losing money every day. If that’s not the motivation you need to start using a food cost calculator, I don’t know what is!
7. Deal with limited suppliers
One-stop shopping is a good strategy for restaurants to pursue. Especially if they want to save money on food purchases, mainly because of the increased purchasing power you get from ordering from only one supplier.
8. Pre-portion ingredients for menu items
Pre-portioning ingredients for menu items can improve your bottom line. One way to do this is by pre-measuring/preparing ingredients that you place inside a container that will then be used to serve your food. This is especially important for ingredients that are costly and/or have a limited shelf life, like cheese, sour cream, etc. By doing so, these ingredients will not be wasted, and you can also ensure that your customers will get every single cent worth of their meal when they dine in your restaurant. This will also help speed up service time because employees no longer need to measure or cut them later on.
9. Seasonal ingredients will help you out
The idea of eating what is in season is a good one for many reasons. Seasonal ingredients will have more flavor, will be cheaper and are generally better for you as well. In addition, you can play a minor role in supporting the local economy and strengthen the community with your food purchases. Eating with the seasons is always a smart way to shop for foods.
10. Start using the FIFO method
I can’t believe you haven’t heard of using the ‘First In, First Out’ storage method for food expiration. It’s pretty simple, really: label all your food with its expiration date, and then place the oldest produce in front after sorting by use-by dates. So, stuff like tomatoes will be placed first. And to avoid spending a small fortune on rotten produce at the back of the fridge, staff take them out from the front when they need something new.
You might be surprised to learn how much money you can save on everyday business operations by implementing these strategies in your restaurant!