Running a restaurant is an exciting but demanding challenge, especially when it comes to controlling costs and maintaining sustainable profitability. At the heart of this concern are ongoing expenses, which can weigh heavily on your establishment's profits. Whether you're an established restaurant owner or a new entrepreneur looking to optimize your financial management, reducing expenses is an essential step in ensuring the viability of your business. Innovorder gives you its top tips for reducing expenses in this comprehensive guide!
5 tips for reducing running costs in your restaurant
1. Analyze your restaurant's financial situation
Restaurant owners, before you embark on your quest to reduce current expenses, it's essential to draw up a complete financial balance sheet for your establishment. Carefully gather data on your revenues and expenses to better understand your current situation. Then identify the expense items that have the greatest impact on your profitability. This detailed analysis will give you a clear picture of your current profit margins and areas for improvement.
👉 To find out more: Margins and profitability in catering, understand it all!
2. Set targets for each expense item
Now that you have an overview of your financial situation, it's time to set clear, realistic targets for each expense item. Analyze in detail the costs associated with raw materials, personnel, rent and other essential expenses. Based on past performance and industry standards, set ambitious but achievable targets. Setting these targets will guide you on your journey towards more efficient management of your financial resources!
3. Save money
Reducing your restaurant's expenses is an essential step towards improving profitability and ensuring sound financial management.
Here are some effective strategies for achieving this:
- Efficient inventory management: Keep a close eye on stock levels to avoid over-supply and losses due to out-of-date products. Implement a stock rotation system to prioritize the use of older products. Negotiate with your suppliers to obtain advantageous prices while maintaining optimum product quality.
- Control your labor costs: Carefully analyze your staffing needs according to your restaurant's occupancy rate. Establish efficient work schedules to avoid unnecessary overtime. Invest in training to improve productivity and efficiency.
- Practice waste management: Adopt a sustainable approach by limiting food waste. Raise your team's awareness of the importance of reducing kitchen waste, and encourage waste recycling whenever possible.
- Optimize operational processes: Identify inefficiencies in your operations and find solutions to improve them. For example, reorganize your kitchen to make food preparation easier, or use technology to speed up the order-taking and payment process.
- Negotiating with suppliers: Don't underestimate your negotiating power with suppliers! Look for competitive offers, and don't hesitate to ask for discounts or additional benefits depending on your purchasing volume.
- Track financial indicators: Monitor your financial statements often to identify trends and areas where savings can be made. Analyze your costs in relation to revenues, and draw up budget forecasts to better manage your expenses.
By implementing these strategies consistently and involving your team in the process, you can reduce your restaurant's costs while maintaining service quality and guest satisfaction.
👉 Going further: 8 valuable tips to ensure your restaurant's profitability
4. Calculate your restaurant's fixed costs
In addition to reducing your expenses, it's essential to know your costs, especially your fixed costs, so you can plan your spending more effectively.
To calculate a restaurant's fixed costs, you need to add up all the expenses that remain constant, whatever the restaurant's activity or production level. These costs are incompressible in the short term, as they don't change according to your sales or the number of guests served.
Here's how to do it:
- List fixed costs: Start by listing all the costs that remain stable, regardless of your restaurant's level of activity. These can include rent, electricity, gas, water, insurance, subscriptions, licenses, salaries of permanent employees, accounting fees, etc.
- Calculate monthly costs: Take each fixed cost and determine its monthly amount. If some costs are billed annually or quarterly, divide them by 12 or 3 to get the equivalent monthly cost.
- Add up fixed costs: Add up all monthly fixed costs to obtain the restaurant's total fixed costs.
For example, suppose your restaurant's monthly fixed costs are as follows:
- Rent: 3,000 euros
- Electricity: 500 euros
- Gas: 200 euros
- Water: 150 euros
- Insurance: 400 euros
- Salaries of permanent staff: 4,500 euros
- Subscriptions and licenses: 250 euros
- Accounting services: 300 euros
The calculation would be: Fixed restaurant costs = 3000 + 500 + 200 + 150 + 400 + 4500 + 250 + 300 = 6,600 euros
The restaurant's total fixed costs amount to 6,600 euros per month. This is the minimum amount your restaurant will need to cover each month, regardless of its level of activity or sales.
5. Digitizing your business
And did you know? The last thing you need to do to reduce your expenses is to digitalize your restaurant.
In fact, digital solutions are designed to help you optimize your operations and improve your efficiency, which helps reduce expenses in several ways:
- Inventory management: you can use digital solutions to monitor your inventory and stock levels in real time. By having a precise view of the products in stock and your consumption, you can avoid unnecessary overstocking and reduce losses linked to expired products. For example, the Innovorder, Inpulse.ai integration enables you to limit your material costs while increasing your profitability.
- Improved operational efficiency : with the aim of boosting your restaurant's profitability, digital tools that optimize order taking and improvekitchen efficiency enable you to better manage your productivity, reduce waiting times and increase your capacity to handle customers. This translates into higher revenues and lower costs per customer.
- Data analysis: by examining sales, cost and performance data, you can easily identify areas for improvement, enabling you to make better decisions to optimize their spending. For example, IO Analytics presents graphs on sales revenue, the number of products sold, the breakdown of sales by product, details of sales by product and by restaurant, and so on. All this data helps you to make more informed decisions, improve operational efficiency, optimize the customer experience and increase profitability.
"Innovorder's Heat Map helps me to manage the payroll as closely as possible to the restaurant's activity, by tracking the sales generated hour by hour." Guillaume, Smash Smash franchisee in Bordeaux
👉 To find out more: How Smash Smash became a management ace thanks to Innovorder
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Are you a restaurant owner looking for digital solutions to help you boost your profitability? Contact an Innovorder expert today and get personalized advice!
