Restaurants are facing immense pressure to keep costs low while recovering from the COVID pandemic. Ideally, restaurant owners want to cut costs rather than drive away customers by raising prices. With a wide variety of costs weighing on them that haven’t gone away, it’s important to take stock of cost centres in your business and find ways to reduce unexpected expenses.
Aim to Reduce Food Waste
Food is wasted on a massive level across the United States, with 63 million tons worth $218 billion being wasted each year. While waste is often seen as acceptable to avoid slowing down work or running out of stock, reducing kitchen waste is known to be an extremely important cost-saver. A report from the sustainability group Champions 12.3 in February 2019 found that for every $1 invested in programs reducing kitchen waste, $7 were saved in operating costs, and 2 cents on every dollar of costs of goods sold was saved. 76% of those who implemented a food waste reduction program recouped their investment within a year.
The starting point to correcting food waste is measuring food usage to see how much and what types of food are wasted. Food may be wasted due to oversupply of perishables that aren’t used. Additionally, it can be wasted during the food preparation process and never make it to the customer due to spillage, mismeasurement, or other careless practices.
From there, it’s time to rethink actions that lead to wasteful spending.
Improve Inventory Management
Inventory and purchasing practices play a major role in overspending and waste. Lack of information about your inventory can lead to purchasing excess stock to be safe. Over-purchasing from suppliers can lead to an oversupply of stock that can’t be preserved for long periods, and lack of space can lead to discarding less commonly-used items. Having an effective inventory management system that can automatically record stock from suppliers as it arrives, so employees can track stock as it is used and not have to perform inventory as often.
Inventory management systems should be used to track prices as well, showing which products are becoming too costly or should be managed more carefully to avoid waste. Once you know what orders had the most waste, be ready to cut down bulk orders and buy less stock, more frequently to see costs come down.
Point-of-sale systems aren’t generally equipped to manage inventory on their own, but modern POS systems are smarter and can integrate with multiple sales channels of your business technology and communicate with your inventory management system instantly. Some are available to restaurants that automatically keep count of items and ingredients when orders are placed, allowing you to see the connection between supply and storefront sales. When operators can determine the cost of goods sold and connect it directly to the inventory purchased, operators can spot any losses that took place on their premises and correct them.
Engage Employees in Avoiding Waste
Employee food handling can play a role in food waste, so in turn better training and monitoring of workers can cut costs. Engaging workers in the act of cost-cutting is critical; make them realize how the business depends on the careful allotment of food and provide positive reinforcement to practices that avoid waste. Encourage menu strategies that preserve ingredients that could be used in preparing multiple orders instead of throwing them out at the end of the day. Teach employees how to measure more carefully and make sure everyone, even front-of-house staff, is contributing to a cleaner, more cost-effective kitchen. Tricks like recycling oil and reusing packaging rather than buying more can also save money without investment.
Energy Efficiency Solutions
In addition to food waste, energy consumption is a major source of expense for businesses and many energy efficiency solutions can reduce power bills. Arby’s took action and from 2011 to 2016 reduced energy usage by 18.2 per cent, yielding more than $31 million in energy-related cost savings. Using LED bulbs can reduce lighting costs by 75% and produces less heat, cutting cooling costs. EnergyStar-approved appliances consume less power as well; do the math and see if a fryer, oven, or charbroiler with a higher upfront cost will pay for itself within its expected lifespan.
Heating and cooling are a major expense, especially cooling in a hot kitchen. Consider both low-investment and high-investment approaches to cutting energy costs. Mending insulation on refrigerators and using durable strip curtains in walk-in freezers will reduce power consumption and isn’t very expensive. Using windows and blinds can control temperatures indoors. It takes more investment to get your HVAC system cleaned, repaired or upgraded, but more efficient equipment will lead to cost savings.
It’s impossible to act on cost-cutting without awareness of the problem. Reducing waste in food and other expenses begins with accounting for your losses and recognizing how much more they affect your business than you realize. From there, it’s time to take action and work with your staff to cut unnecessary costs and avoid waste.