07
Oct
2020

3 Ways a Restaurant Can Cut Operating Costs Without Harming Quality

During the current economic downturn, business owners are scrambling to trim costs without compromising on quality and customer experience. But that’s easier said than done since many small entrepreneurs in the food business already operate on a razor-thin profit margin.

3 Ways a Restaurant Can Cut Operating Costs Without Harming Quality 1
Image credit: Jay Wennington on Unsplash

The good news is that there are several things you can do to trim business operating costs in a restaurant without harming quality or safety. And it doesn’t involve sacking any of your current employees either.

Focus on Your Team

Focus on your employees, as retaining existing staff members is much more cost-effective than recruiting new talent. Try to reduce turnover by double digits for considerable savings. Some of the best strategies to keep your best men on board include:

· Creating team cohesion: Try to resolve the disputes and discontent between the kitchen and the rest of the staff. This is a recurring problem in restaurants which often leads to unhappy employees that may leave. From time to time, give each of your team members’ a different role so that they can fully understand what other roles entail and the stress their peers have to put up to as well. Switching roles will also help create more skilled employees, with a better understanding of the business and better qualifications for a management position. Cross-training some of your staff will also give you safety net when a critical employee decides to leave and will help streamline your business.

· Hire from within. When you need somebody to fill a position, look for strangers only as a last resort.Your team might have hidden gems that have been waiting for a promotion for years and giving their dream job to an outsider can only increase their discontent with the company.

· Listen to your team. Encourage your employees to be honest and give you feedback. Don’t take criticism too personal. You can learn valuable info about what does not work in your restaurant even from a bitter employee who has decided to leave and never look back. Hold regular staff meetings and give honest feedback to your team members as well. Honesty begets honesty.

·  Show them that their work matters. Simple acts of showing appreciation to a team member can go a long way. In fact, a Forbes survey revealed that just by showing appreciation to its team, a business can cut turnover by up to 31%. Verbal praise works surprisingly well, and so does peer feedback on a constant basis. But don’t forget about the small perks such as free or discounted meals or a day off every now and then.



Cost Savings over Cost Cutting

Cost savings and mindful spending are a better strategy in the long run than just engaging in mindless cost cutting. Have a budget at the start of the month but keep it flexible. It is best to have a plan when saving as it will keep you and your team better focused.

Also, make the adjustments where necessary. You might need to switch suppliers or renegotiate existing contracts with suppliers as food prices continue to climb. Also, keep a close watch on food costs, food waste, and cash flow. You will want to know where each penny goes when building a realistic budget and long-term plan. 

If you lack the time and resources to conduct financial reviews of your financial operations on a constant basis, you can outsource the task to a reputable third party. Some franchisors perform such services for their operators free of charge.

Also, keep in mind that small savings add up such as filtering out the deep-frying oil instead of tossing it every other day.

Further, getting rid of the regular trash cans in the kitchen is a highly effective trick to prevent perfectly good food from ending up in the landfill. Personalized, clear food boxes for each kitchen employee to toss the waste into is another effective way of cutting down food waste and hold careless employees accountable for their actions.

Also, keep tabs on product specifications and prices of your key ingredients and a record of your regular orders. You might notice that less expensive products are just as good as the pricier ones your team is currently reordering on a daily basis. Small savings do add up.

Cut Only When Absolutely Necessary

The first thing a small restaurant hemorrhaging cash does is to trim operating costs, such as sacking employees, going for cheaper, but lower quality ingredients, or reducing portion sizes. Don’t think that your team and your customers won’t notice.

If you really need to cut costs, do it in a sensible way and only when absolutely necessary. For instance, most restaurants have more food in their inventories than needed. Analyze each type of product, compare the inventory levels to current foot traffic and only have a small excess as a safety net. By tweaking inventory levels, you will also have to deal with less food waste or spoilage and your employees might become a bit more mindful when prepping those pricey products if they come in short supply.

And talking about cost cutting: Never cut corners on what really matters. For instance, workplace safety should be your top priority, unless you want to risk paying compensation and lose a lot more money than you’ve tried to save. Your employees will also feel more appreciated and may stay on board longer if you don’t put their health and life at risk for the sake of your bottom line.

In Conclusion

There are many ways a restaurateur can trim unnecessary business operating costs and save big money in the long run. The key ingredients are a loyal and dedicated team, smart savings, and cost cutting only when it is absolutely necessary.

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