Restaurant Cost Saving Ideas: How to Cut Costs in Restaurants

Nick Mirev
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    The latest developments in restaurant technologies have made the market very competitive. Business owners in the restaurant industry need to be on track with the trends in the field of food service. As restaurant costs rise due to inflation and increasing marketing and advertising costs, companies are looking for ways to reduce their expenses. In this article, we’ll share some restaurant cost saving ideas. Hopefully, with the help of these policies, your business can maximize profits and beat the competition in this very difficult business field.

    Key takeaway: There are hundreds of restaurant cost saving ideas that can be implemented easily. The process of discovering these opportunities includes good communication between the management and the employees. Eateries should constantly analyze the performance of their business and menu in order to find good opportunities for cost cuts.
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    Restaurant Cost Saving Ideas

    Optimize Inventory

    Reducing excess inventory is one of the key elements of a restaurant’s success. Overpurchase of products from produce distributors or meat suppliers can lead to food waste in restaurants due to the spoilage of some products. An easy way to optimize inventory is to set a par level for each product.

    Invest in Software Solutions

    Modern software can help restaurants find multiple unnecessary expenses they can easily cut. Modern software for restaurants includes various features such as sales tracking, inventory management, recipes, and educational materials.

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    Invest in Automation

    Restaurant automation comes in many forms. For example, fast food establishments can invest in self-ordering kiosks. Robots in restaurants can also be a great investment. They have the potential to reduce labor-related restaurant monthly expenses and are one of the trendiest restaurant cost saving ideas. Furthermore, waiter robots can also help with customer acquisition and be used as part of a restaurant’s marketing.

    Optimize Portion Sizes

    One of the trends in restaurant sustainability is to reduce portion sizes. Research shows that a large percentage of diners leave part of their dishes unfinished. Eco-friendly dineries that aim to reduce restaurant food waste can analyze which meals are more likely to be left unfinished. Based on that, they can reduce the portion sizes of these meals. 

    Choose the Right Suppliers

    When it comes to distributors, most restaurants should aim to find suppliers who trade with local producers. That means if you’re searching for a wholesale dairy distributor, prioritize suppliers who trade with local dairy farms. By including local ingredients in dishes, a business reduces its environmental footprint. Furthermore, these products are often cheaper as they have lower transportation expenses. 

    Another important aspect of choosing suppliers is to check their MOQ (minimum order quantities) and what their wholesale prices are compared to other distributors. 

    Constantly Change Menus and Adapt to Trends

    In recent years, QR menus have become very popular. The main reason for their popularity is the fact that they allow restaurant businesses to easily change their menu. Whether you wish to change the price of certain items or to remove products from the menu, it’s much easier to do so if the menu is online. Not having to pay for menu design and printing can be a great restaurant cost saving idea.

    Experimenting and changing menu items is important in order to find the most profitable dishes for your food service establishment. Make sure to include a seasonal menu and a food and beverage pairing menu. Changing menu items should not be done just for the sake of change. Instead, it should be done after a careful analysis of the food cost of the dish, the profit margin, and its popularity.

    Invest Time and Effort in the Beverage Menu

    Most establishments have higher profit margins from drinks compared to dishes (check out our article on are bars profitable). One of the reasons for that is that purchases from the bar require far less time to be prepared compared to meals. Furthermore, chefs and other kitchen staff are often better paid compared to bartenders. That’s why one of the ways to increase profits is to pay extra attention to the beverage menu and the drinks served at your establishment. A good idea might be to replace some of the least-purchased cocktails or wines with more popular or expensive ones.

    Save on Electricity

    Smart and modern appliances usually have a much lower energy consumption compared to older models. That being said, one of the restaurant cost saving ideas includes investing in energy-saving appliances. Other potential saves on utility bills include buying energy-saving lights.

    Reduce Overpouring

    This is a common practice, especially during rush hours when bartenders have many orders. Overpouring can be established with the help of bar inventory software like BinWise. Restaurant managers who have noticed overpouring of drinks should train employees better and purchase proper measuring tools. This restaurant cost saving idea is especially important as drinks are often the most profitable items on the menu and overpouring can turn these profits into losses.

    Negotiate Contracts with Vendors

    Due to technological advancements, some manufacturing processes become less expensive and more efficient. This can lead to reduced prices of some goods used in restaurants. That’s why, every now and then, eateries should negotiate contracts with their distributors. Products like restaurant supplies or equipment might have become cheaper compared to an earlier period.

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    Frequently Asked Questions about Restaurant Cost Saving Ideas

    As the hospitality and food service industries are among the most competitive ones, managers need to be creative and implement all possible restaurant cost saving ideas. That will help them increase profitability and keep the business a step ahead of the competition. 

    How Restaurants Calculate the Food Cost Percentage?

    The total food cost as a percentage of all restaurant expenses is calculated by dividing the total restaurant cost of goods sold by the total food sales. For example, if all food sales for a period of time have generated $10,000 in revenue and the cost of the products needed to make them was $30,000 that means the food cost percentage for that period is 30%. This indicator is important because it shows the efficiency of the food menu. Normally, the food cost percentage is between 25 and 40 percent. It depends mainly on the type of the establishment.

    How to Calculate Food Cost per Portion?

    The formula for calculating food per portion is the total cost of all products in the recipe divided by the number of portions. Here’s an example of that formula. Let’s say a restaurant offers a pair of Prosciutto bruschettas in their entree menu. The cost of the ingredients needed for making 20 bruschettas (10 portions) is $10. That means the cost per portion is $1. Food cost per portion can be used as an indicator to determine the right selling price of menu items. Keep in mind that this expense does not include restaurant labor costs, rent, utilities, and other variable or fixed operating expenses

    What Is the Biggest Expense in a Restaurant?

    Labor and food products are the biggest costs of restaurants. The percentage varies based on the type of the food service establishment and other factors. For example, restaurants that offer higher additional value and employ experienced chefs with higher salaries are expected to have higher labor-related restaurant expenses compared to fast food restaurants. On the other hand, as more and more venues embrace automation and technologies, the percentage of labor costs is decreasing. That includes not only software solutions like Revolution Ordering but also autonomous chef or waiter robots. These innovative solutions are among the most trendy restaurant cost saving ideas.

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