As cost of living goes up and fuel prices rise, a difficult winter is expected for restaurants across the UK and Ireland. This issue is compounded by staff shortages and an urgent need to tackle environmental issues. Already operating on slim margins, many restaurants are looking for ways to further save money. In this article, we look at seven ways to reduce costs without sacrificing quality.
1. Look for the micro drivers of cost reduction
In the 1980s, American Airlines famously made a small change to the salads they offered passengers. Robert Crandall, then president of the airline, calculated that if they removed one olive from every salad they would reduce costs by $40,000 per year. This one act seemingly inspired other airlines to find their own micro cost-saving measures such as cutting limes into 16 pieces instead of 10, removing on-board sales of duty-free items (in order to reduce aircraft weight and thus save on fuel) and not offering receipts in order to reduce paper waste. These changes often go unnoticed for customers, but can lead to huge savings.
When considering cost-cutting measures, restaurants often think of dramatic, macro-level changes — but small, ‘olive-like’ adjustments can produce enormous savings over time. If you sell food for takeaway, try reducing the amount of salt packages or napkins included with each order; this has the added bonus of being more environmentally conscious. If you offer complimentary snacks with drinks, consider halving the portion size.
The cost-saving measure you choose will depend on your restaurant. Our best advice is to examine your processes over a short period of time with the express purpose of finding tiny, almost indistinguishable changes you could make to reduce costs.
2. Get staff on board
Without proper buy-in from employees, most cost-reduction strategies will fall flat. If you are making efforts to reduce portion sizes, minimise waste and streamline resources, it is not enough to simply pass on instructions to staff; your team needs to be inspired to take action.
Be transparent with staff. Explain the reasoning behind the cost-reduction strategies and what it will mean to the restaurant’s bottom line and its future survival. Knowing the numbers will help your team to visualise the impact of the changes. With every cost-saving strategy you implement, make sure staff members are fully trained and understand the rationale. This will be key to inspiring real change at your restaurant.
3. Reduce food waste
Food waste is an enormous environmental issue that modern businesses can no longer afford to ignore. Today’s customers are more attuned to environmental issues and want to support companies that are making a difference. Luckily, waste reduction also makes sense from a purely cost-reduction perspective. When food goes unused in your kitchen, you’re wasting good money on disposal — and that’s on top of the costs incurred by ordering, prepping and cooking the food.
One way to reduce food waste is to limit your excess inventory. It’s true that restaurants need to maintain a certain level of stock — but when businesses over-order, it often leads to spoilage and significant amounts of food waste. Monitoring and measuring is the first step in identifying the biggest sources of waste in your kitchen. Find out more ways to reduce kitchen waste here.
4. Invest in energy-efficient appliances
In the same vein as the previous point, restaurants can reduce energy costs by investing in energy-efficient appliances and being more mindful of usage. Go through your establishment, looking for ways to save money on utilities. Consider new processes and protocols to reduce energy use, and find energy drains. Changing to energy-efficient light bulbs is one example of a fast, effective and environmentally-friendly way of lowering your bill.
Once again, buy-in from staff will be incredibly important here. Most people are careful about how they use energy at home, turning off lights and unplugging appliances that are not in use. However, in a work setting, attitudes become less stringent. Be fully transparent, explaining the reasoning behind the changes and encouraging staff to be mindful of energy usage.
5. Reduce the size of your menu
Restaurants can be slow to remove dishes or trim down their menu, but it often makes sense to do so. Removing unpopular dishes cuts inventory costs, reduces food wastage and allows kitchen staff to focus on increasing the quality of the dishes you offer. The more dishes you have, the more inventory you need; as fresh food spoils fast, there is added pressure to sell less popular items before they spoil. Removing these dishes removes the need to stock additional ingredients.
Reducing menu size also makes for a better dining experience, as large menus can often be overwhelming for customers. To keep healthy margins, remove the least popular dishes from your menu, keeping only the best sellers and high-profit items. Then make a conscious effort to reexamine your menu at regular intervals.
6. Know your peak hours and staff accordingly
It might be easier to keep staff on a set schedule, but from a cost-saving perspective it can be incredibly inefficient. Overstaffing — or staffing the wrong people — can put a huge strain on resources.
Get to know the cycle of busy and slow periods, and avoid overstaffing. This is not to say that you should be understaffed; while overstaffing can waste money, understaffing can lead to poor service, dissatisfied customers and damaged reputations. It’s important to find the sweet spot. Consumer behaviour evolves over time, too; recent research shows that Thursday is 'the new Friday' with more people having relocated to more rural areas and working from home more often. Ask managers to pay particular attention to staffing over a short period of time, focusing on getting the balance right.
7. Make staff retention a priority
There are cost-cutting measures and cost-saving measures. Cost-cutting measures are things that reduce cost immediately and make an instant impact to your bottom line, such as changing to a cheaper dishwashing product or reducing portion sizes. Cost-saving measures are measures that you take now that will reduce costs in the long run.
A prime example of a cost-saving action is focusing on staff retention and making sure that the staff you have now are well supported and happy. When your employees stay with you for a long time, you save money on expenses like recruiting and training. This action is doubly beneficial in today’s business climate, where staffing is a major problem for food outlets. Think long-term when hiring — then make sure that employees feel respected, heard and appreciated. If they have complaints, try to deal with them in an efficient manner. Treating employees well mightn’t feel like a cost-saving measure in the moment, but will make a big difference in the long run.
Nutritics makes it easy for you to analyse your menu, manage waste and cut costs. Book your free demo today to see where you can save!