How to Reduce Expenses in a Restaurant & Boost Profitability

The amount and diversity of short-term and long-term restaurant expenses can easily scare even the most seasoned restaurateurs. But that doesn’t have to be the case.

In the article below, you will discover ten creative ways to reduce restaurant costs and increase profits by relying on restaurant technology, free marketing, and smart menu engineering.

1. Cut down your menu

Your menu is the first thing you need to analyze when reducing costs. You don’t need a large menu to be successful.

Identify the menu items that sell the most and focus on perfecting those recipes while removing items that don’t sell or that cost too much to produce. You need to focus on the best return on investment for your restaurant.

Combat the apparent lack of variety by allowing customers to add toppings, extra ingredients, add-ons, and sides to customize their order.

Make the most of your ingredients by using every part of them for different menu items. That way, you won’t add to your inventory costs and will create more items to attract customers to your restaurant.

Try to build your restaurant menu based on the inventory you have. For example, if you’ve bought too many bananas for your fruit salad, add a banana bread daily special to the menu to use the excess stock before it goes bad and you need to dispose of it.

An excellent way to boost restaurant sales is to start accepting orders online. Research different online ordering systems to find an affordable one that meets your needs.

However, technology can help you do more than increase sales. A table reservation system can help you fill tables faster and optimize your workflow based on the number of customers you expect daily. A QR code menu that allows customers to order and pay at the table can help you serve more people daily by increasing table turnover.

Adopting the latest restaurant technology doesn’t have to cost you your entire budget if you choose the right tools.

With your restaurant’s long-term expenses in mind, consider purchasing energy-efficient appliances, which will save you money in more ways than one. Check to see whether your state offers tax credits for restaurants that use energy-efficient appliances.

You can also buy energy-efficient light bulbs to lower your energy bills and do your part in helping the environment.

You don’t need a big marketing budget to make your restaurant stand out online. Create free profiles for your restaurant on all the major social media platforms, post often, and interact with your followers.

Collecting positive reviews should also be one of your top priorities because word-of-mouth is a powerful marketing tool. Sign up for the main restaurant review sites, keep your information up to date, and reply to all the reviews you get, be they positive or negative.

Restaurant insurance is a must-have to keep yourself, your employees, and your business safe and liability-free.

The type of insurance you need depends on your business model. The most common type of insurance for restaurants is general liability insurance. However, you can get other types of insurance, from workers' compensation to liquor liability.

To avoid high food costs and food waste, reduce your portion sizes. This will allow you to focus more on the quality of the ingredients and diversify the ingredients you use.

That doesn’t mean you should serve small portions and leave your customers wanting more. However, if you consistently notice leftovers on your customers’ plates, consider offering smaller sizes.

According to the U.S. Bureau of Labor Statistics, in 2021, the accommodation and food services industry had a turnover rate of 86.3 percent. That leaves restaurants spending money on rehiring and retraining someone new.

To reduce employee turnover, only hire people who match your restaurant culture and offer competitive pay and benefits, as well as opportunities for development, flexibility, and an understanding working environment.

There are many advantages to sourcing your ingredients and produce locally, from their quality to the positive environmental impact, to the lower costs.

You can also get more seasonal ingredients and treat your customers to different dishes each season while supporting food producers and farmers in your community.

If you also deliver food, you might fear the costs associated with the delivery, from the delivery drivers’ salaries to how much you spend on fuel.

To spend less money on delivery, purchase software that can calculate the most cost-efficient routes drivers can take depending on traffic, order density in the area, weather, etc. That way, you’ll also lower your delivery carbon emissions.

Conclusion

The ten tips above can help you reduce restaurant expenses without compromising the well-being of your team, the quality of your food, or your customer service. Include as many as possible in your business strategy to maintain profitability even during challenging times for the restaurant industry.