Finding ways to save money is vital in the restaurant industry because cash flow issues are very common. The overheads involved with running a restaurant can be incredibly high and if you can’t fill the place, you will really struggle. However, there are certain areas where you need to spend money if you want to make the place a success and finding a good balance between saving and spending is key to making your restaurant work. One of the major reasons why restaurants fail, for example, is that they don’t spend enough money on experienced employees because they are trying to make savings. It’s important that you don’t compromise on the important things and you find ways to make savings elsewhere. These are some of the most effective ways to cut costs in the restaurant industry.
Reduce Food Waste
Food waste is one of the most common areas where restaurants waste money so it’s important that you learn to be economical. If you waste a lot of food, you’re just throwing money directly in the bin but there are some simple ways that you can reduce food waste. First, you need to use a good kitchen prep list that takes into account the average sales on a given day. This will tell the chef exactly how much food to prepare so they don’t over prepare. Without a prep list, most chefs will prepare too much food and a lot of it will end up in the bin. You should also invest in a good digital inventory system so you can make sure that you order the right amount of ingredients and they all get used before they go bad.
Recycle Cooking Oil
You probably don’t think much about the amount of cooking oil that you throw away, but did you know that you could be making money from it? There are some great companies out there that will buy old cooking oil so they can recycle it. This allows you to turn cooking oil disposal into a profitable step instead of pouring money down the drain. It’s better for the environment and it will give you an added income source so you can manage your cash flow more effectively.
Digital Menus
Paper menus cost a lot of money to print, especially if you change your menu on a regular basis. But you can avoid all of those costs if you switch to digital menus instead. Investing in tablets for your servers is a relatively large upfront cost, but once you have them, you don’t need to spend anything on printing ever again.
Use The Food Cost Formula On Every Item
The food cost formula tells you how much your ingredients cost compared with the price of the item on the menu and it’s important that you do this on everything that you sell. The average cost of ingredients should be around 15-30% of the menu price, giving you 70-85% profit on each. If the percentage is a lot higher, you will not have enough revenue to pay staff costs, rent and utility bills so you need to make a change. If possible, look for cheaper places to source your ingredients or consider raising the menu price.
If you cannot find ways to cut costs without sacrificing quality, your restaurant business will end up with a lot of cash flow issues, so make sure to follow these tips.
