The UEAT Blog

What are the best cost reduction strategies for restaurants?

Posted on
June 21, 2023
What are the best cost reduction strategies for restaurants?

Minimizing costs is one of the most effective ways a restaurant business can increase profits. In this article, we share different strategies to help you reduce costs and increase the efficiency of your operations.

How to reduce costs in a restaurant

1. Identify low-selling items

A menu item that doesn’t sell well is a potential source of unnecessary food waste. If your restaurant has items that use costly ingredients but don’t sell well, then they are costing you money. There is no point in keeping unpopular items on your menu. It is better to spend your time and resources improving the appeal of your more popular items. Online ordering systems can help you identify low- and high-selling items.

2. Reconsider portion sizes

If you keep finding yourself throwing away leftovers out of your customers’ plates, then you might want to rethink your portion sizes. If you’re throwing too much food in the trash, then you are also wasting away ingredients, labor, and money. As long as customers feel satisfied with the dining experience you’re providing, they will not notice or care about a slightly reduced portion size.

3. Pre-portion ingredients

To reduce food costs by adjusting portion sizes, rules must be put in place to measure the amount of each ingredient used for every portion. Aside of helping you save money, this approach will help your employees streamline the food preparation process. By working with a specific set of instructions and pre-portioned amounts of food, employees may be able to serve clients at a faster pace.

4. Optimize ingredient use

There is no need to throw away quality foods that are still safe to eat. Just because an ingredient is not in prime condition, that doesn’t mean it can’t be repurposed. For example, bruised or unpleasant-looking vegetables can be used in the preparation of sauces and other items that don’t rely on their shape to look good. Likewise, bread that is no longer fresh to be served as such can be toasted or turned into croutons. These methods can help you extend the shelf life of your ingredients.

5. The FIFO method

FIFO stands for “First in, first out”. This method is essential to optimize food use. Whenever new items are delivered, their expiration date should be reviewed and documented. Employees can place a piece of masking tape over the packaging of new goods and write the arrival and expiration dates there. This will help save time, as the expiration date is commonly difficult to find.

6. Use seasonal ingredients

Seasonal ingredients are fresher, tastier, and cheaper than most alternatives. Beyond offering restaurants many benefits, seasonal ingredients also give menu items a touch of diversity, making them unique in the eyes of customers. Furthermore, buying seasonal ingredients helps support local producers.

7. Calculate food costs

To create the most efficient inventory management strategies, it’s important to know the ratio of the ingredient cost and the revenue generated by sales. Food cost control allows restaurateurs to know how much money they are actually making, and set menu prices accordingly. If you’re trying to adopt cost-effective inventory management practices, then you need to learn the best methods to calculate food costs.

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How to cut labor costs in restaurants

1. Hire the right individuals

Hiring the right people is a surefire way of efficiently controlling labor costs in restaurants. There is a difference between an experienced employee that doesn’t fit with your restaurant’s culture and a hire that’s wet behind the ears but ready and eager to learn and improve. A person’s lack of experience shouldn’t immediately disqualify them from the job. Proper training can turn motivated employees into experts at a very fast pace.

2. Smart staffing

Finding a happy medium between overstaffing and understaffing can be a hefty challenge. While overstaffing can lead you to pay employees to do nothing, understaffing will create massive bottlenecks, especially during heavy business hours. To optimize staffing, restaurateurs must keep track of when slow periods occur during the week, and staff accordingly.

3. Support your staff

Motivated employees work better. It’s important to always keep employee morale in high regard, as the restaurant industry would crumble without them. Remember to always celebrate your workforce’s successes and keep the communication lines open for them to relay any issues in a safe and friendly manner.

4. Optimize your restaurant menu

Improving the efficiency of your menu can do more for your restaurant than just helping with food costs. An optimized food menu will help streamline your employee’s tasks, potentially minimizing your staffing needs and reducing the time and resources needed to train new employees.

Some strategies meant to save money might be costing you more due to the added labor costs. For example, you may decide to buy whole chickens to avoid paying the extra cost of buying processed chicken, but that means your employees will spend a considerable amount of time preparing the chickens for the kitchen, delaying their other tasks.

Learning to optimize your menu can grant many benefits for restaurateurs, employees, and customers. Don’t miss out on these expert tips to raise your restaurant menu to its highest potential!

How to lower overhead costs in restaurants

1. Optimize the supply chain

Gaps in the supply chain can cost a restaurant business a considerable amount of money. Multiple delivery fees, for instance, can increase restaurant costs without providing something of substance. In the best-case scenario, restaurateurs can find a single supplier that can provide most, if not all, of the ingredients they need.

2. Partner up with trustworthy suppliers

Operational costs related to food acquisition, delivery, and quality control can be mitigated by working with people you trust. If you share a good relationship with your suppliers, then you may be able to negotiate better deals with them, including premium prices for large quantities of products or bulk orders. These deals can potentially save you thousands of dollars in due time.

3. Use energy resources efficiently

Energy constitutes a large part of a restaurant’s operating costs, and should therefore be used efficiently. Certain simple actions can be taken to improve resource use, sometimes requiring little to no effort. For example, only running the dishwasher once it is full can efficiently reduce energy costs in restaurants.

Considering the number of times a dishwasher is used daily, and how much energy that incurs, using it efficiently can generate significant savings. In the same vein, lightbulbs should be of the energy-efficient kind and if energy-saving appliances are available for purchase, then they should also be considered. Also, there is no need to keep the AC working when the weather’s nice outside.

4. Do a daily inventory of your most used items

A daily inventory is indispensable for the success of all food service businesses. A food inventory can be created by making a listing of your restaurant’s ten most used food products and keeping track of their quantity at the beginning of the workday. By contrasting that number with the amount of food left at closing time, you can have an accurate idea of how much of an item is used on any given day.

If numbers don’t match up, that could be caused by a variety of reasons. Maybe portion sizes are being measured incorrectly or food is being wasted. Whatever the reasons may be, inventory tracking will help you identify and solve them.

5. Consider acquiring second-hand appliances

A restaurant can reduce costs related to buying new equipment if they choose to buy previously used appliances. Not every piece of equipment needs to be brand new, and buying second-hand is also a great way of helping the environment.

Second-hand furniture like tables and chairs work just as well as new ones, and depending on the nature of your restaurant’s operations and atmosphere, it might give it a vintage feel. Moreover, many restaurant businesses close down and leave barely used appliances behind, so shopping around for them may also help lower costs.

6. Reduce over-use of free items

Giving away free items for them to end up in the trash without being used is a waste of money. For instance, giving wrapped salt packets to every sitting customer may end up costing you more than just putting salt and pepper shakers on every table.

When it comes to delivery, there is no need to include extra napkins or packets if the customer has not explicitly asked for them. Reminding your customers of the environmental benefits of using fewer napkins is not only a great method of being mindful of nature, but it is also a great way of saving money.

7. Go digital

Paper wastes space and resources, while also being unwieldy compared to digital alternatives. By implementing digital strategies in restaurants, managers can better organize their inventory, kitchen, and finances. Digital files occupy very little space and can be accessed from a wide variety of devices, including personal computers and smartphones.

Plus, investing in digital solutions has given restaurants a competitive advantage during the pandemic. Due to safety reasons and our new reality, customer behavior has changed and now more than ever people are looking for convenience and personalization. Online ordering systems and smart marketing tools allow restaurants to open up new revenue streams, improve customer loyalty and ultimately increase profit margins.

How can restaurants cut costs during COVID?

1. Use innovative marketing strategies

Thanks to the Internet, you can promote your restaurant to large audiences without having to pay thousands of dollars in marketing. There is a myriad of free and affordable online resources for restaurants to improve their online presence. Social media, for instance, is free to use and many people love interacting with their favorite brands while using it. Using free tools available to all restaurateurs, you can sign up your restaurant on Google my Business and attract customers via online searches.

2. Optimize food items for delivery

Some menu items may be hard to pack for delivery. In the modern delivery ecosystem, restaurateurs must consider portion sizes, ingredient use, and food item consistency. For instance, if liquid items tend to spill, proper measures must be taken to ensure their safe travel.

If necessary, restaurant chains may consider creating a second menu, explicitly designed to improve the delivery process. This second menu may contain fewer items, reducing the cost of ingredients and the time needed for preparation, thereby increasing delivery speed and revenue.

3. Implement an online ordering system

An online ordering system is a sophisticated restaurant management software. Designed with state-of-the-art artificial intelligence, UEAT can create an intuitive and dynamic virtual environment where your customers can interact with your restaurant.

UEAT offers customers and restaurateurs much more than an effective delivery option. The machine-learning AI that powers UEAT can absorb information and adapt to the needs of its users, allowing it to fulfill tasks related to marketing, analytics, customer satisfaction, inventory management software, and much more.

Digitize your restaurant

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