6 tips to reduce costs and build a healthy savings for your restaurant
By Melissa Butler, digital marketing and social media specialist at LendVantage
Running a restaurant can sometimes take more work and innovation than running a more traditional service business. Costs are higher as products do not have long shelf lives, employee turnover is higher and the fate of the business lies in the hands of repeat customers. So how can a restaurant save money each month, while still operating at an optimal capacity? Here are a six quick and easy-to-implement ways to reduce costs and leave more money in the owner's pocket.
1. Go paperless
Nowadays, everything is available with a digital copy, and a great way to avoid excess costs is by making records paperless. How does that save money? Let's think of it this way: by adopting paperless transaction receipts and invoices, there is no longer a need for reams of paper, file folders, printer cartridges or printers (not to mention potential repair fees for said printers). Customers' receipts can be emailed or text messaged straight to their phones and signatures can be collected with the swipe of a finger. Bulky check presenters are a thing of the past.
2. Classify costs as crucial or optional
What exactly is a vital cost versus what can be eliminated? This is one of the most important questions a restaurant owner should ask themselves. By cutting down on unnecessary costs, owners can save hundreds of dollars each month. "Is that extra case of ketchup absolutely vital?" "Does the coffee maker really need three filters each pot?" "Are replacement plastic menu holders really necessary?" If the answer is no to these types of questions, that can mean more money in the cash register.
3. Decrease menu size
Some menu items are more popular than others and if there are some that are just not selling, why not eliminate them entirely? By eliminating unpopular items, money is saved on purchasing by reducing related ingredients. Have leftover products that are still fresh, but may get thrown out? Run a special using those ingredients. Using as much product as possible and reevaluating menu items can save thousands of dollars per year.
4. Improve hiring practices
By far one of the most expensive costs to a restaurant is its staff. Between hourly wages, benefits and even training, the cost of employees is high. If there are no standardized hiring practices in place, there should be. Hiring the right people will decrease turnover, cutting down on training costs, and increase revenue through customer satisfaction. Once the right team members are on board, make sure to have a loyalty program in place to reward excellent employees and recognize best practices.
5. Reduce staff during slow (non-peak) hours or days
After a few months of operation, it should be abundantly clear which times of the day, or days of the week, are the most profitable. For those times, proper staffing is imperative, but what about the non-peak times? Do three servers need to be on the clock at two o'clock in the afternoon on a Wednesday? Unless there is a promotion or special circumstances, there shouldn't be. By eliminating unnecessary scheduling, owners can save the hours for peak times, and a little extra money in their pockets.
6. Ask employees for ideas
Who knows a restaurant better than the people that are in the trenches every day? Employees are often teeming with ideas that management may never think of. Asking employees for their advice on how to reduce costs has two benefits. One is in identifying overlooked areas of cost savings. Two is increasing employee satisfaction through the process of making them feel valuable and included in the operation of the business. Consider holding a monthly contest for the best money-saving idea.
With a little creativity and following these six simple tips, saving money doesn't have to be difficult but can add a lot to the bottom line.
Melissa Butler heads up digital marketing at LendVantage. LendVantage helps good businesses become great by simplifying the way they access working capital. LendVantage has been covered in Business Week, Yahoo! Small Business and other media. The company includes Larry King as its brand ambassador.
Topics: Operations Management