• Cheryl Teo

What Keeps Restaurant Owners Up at Night? 3/4: Costs

Down to the third segment of this series. This is a complicated question. A variety of thoughts keep restaurateurs tossing and turning throughout the evening. We asked the question and are now creating resources that deal with the most significant problems, as shared with us by foodservice professionals just like you.


Read the previous part of this series here.


How can I cut my costs?



It's absolutely critical for restaurants to look for inventive ways to save money. Whether it’s a major franchise or an independent, family-owned restaurant— cutting costs is always a relevant concern.


However, not all cost-cutting methods are effective. Deciding what cutbacks are smart is tough, and requires a lot of foresight. What may save you a penny today could lose you, customers, in the long run.


Here are the top three WORST cost-cutting ideas, which you should avoid:


1. Cut Portions and Ingredients

This is one of the first and most common strategies which many restaurateurs use to save money. Although many establishments successfully reduce their costs by decreasing their portions and going easy on expensive ingredients, some operators take this strategy too far. From offering the supermarket’s brand of ice cream as dessert to saving on beer costs by adding more foam to each glass, such changes come across as very disappointing to customers. Definitely a no-go when you're trying to give them the best dining experience.


Tip: It is better to review food costs and downsize menus to include only the most profitable items. Customers return to your restaurant for the unique recipes, flavours, and tastes they become attached to— don't fail them.


2. Sticking to Old Technologies

Investing in new technology is essential in the F&B business. It is often scrapped during tough times, which is not particularly wise. Using old, outdated technology can mean higher costs for your restaurant, even if it seems to be saving you money. System maintenance is often one of the biggest IT costs for companies; the older your system, the more you will have to spend on maintenance and integrations. Not to mention all the problems (and expenses) in cases of breakdowns and outages!


Tip: New restaurant technologies with features like Inventory Management, Invoice Management and more, are not only cheaper to maintain than old tech, but they also help cut costs by accurately identifying and improving areas of waste.


FoodRazor's platform provides real-time, accurate food spending data that puts owners in a better position to analyse their spending accurately and forecast the business’s outgoings based on actual numbers. As an owner/manager, you can easily maintain control over your budget across different outlets, as all transactions are consolidated and viewed in one place.


3. Hire unqualified staff

Since labour costs are one of the restaurant's highest expenses, it makes sense that owners try to keep them down. By hiring young and inexperienced staff, you can save a few bucks— but is it truly the best decision for your restaurant?


There is a significant downside to keeping the salary costs down: underpaid workers tend to be demotivated and uncommitted, which inevitably shows in the quality of work.


Tip: If you want to save costs on salaries, focus instead on retention. Although few restaurateurs account for these costs in their expense sheets, it is time-consuming and expensive to train new staff. If you manage to keep your employees by providing them with a living wage and healthy working conditions, your restaurant will stand to gain from it too.


Managing cost is essential in running a restaurant, but owners must be cautious when deciding how and where to make the cuts. It's good to realise that some methods taken to reduce overhead costs may end up being counterproductive, and a small decrease in cost is not worth jeopardising your restaurant's reputation.


Read the next part of this series here. What Keeps Restaurant Owners Up at Night: Customers.

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