10 Smart Ways Restaurants can Reduce Costs without Reducing Quality

Tough Times Call for Tough Cost Reduction Measures

The restaurant industry has been battered these last few years thanks to the spread of COVID-19. Be it through forced lockdowns, reduced operating hours or spaced out seating, restaurants stand to lose a lot of business if things don’t change. In Hong Kong, for example, a new set of government-mandated operating hours stands to lose the city’s restaurant operators “8 billion dollars.” The story is similar, if not worse, in other places around the world, with restaurants really feeling the pinch of having to alter their businesses to adapt to such tumultuous market conditions. With this in mind, now is the best time to get into good practices and reduce costs wherever possible. This list of 10 cost-saving measures will ensure that your restaurant business can effectively reduce costs without reducing quality. 

Let’s get started!

1. Remove Low-Profit Menu Items

By utilizing the data that your POS system provides, you will be able to quickly identify which items on your menu are being ordered infrequently, or just provide a terrible profit margin. Reducing costs is all about streamlining things like your menu. Once you’ve identified the offending culprits, you should promptly remove them from your menu so that customers won’t order these types of low-profit items.

2. Consolidate Your Supply Chain

Wherever possible, try to order your ingredients from the same suppliers. If you’re paying multiple suppliers for the same types of ingredients (e.g. Vegetables, meat, dairy), you could save a ton by ordering from one local source and having all the relevant items delivered at once. This way, you’ll be able to upsell based on buying local and will pay less for delivery/shipping. 

3. Seasonal Ingredients

Piggybacking off of consolidating your supply chain, you can also opt to include in-season ingredients to reduce costs. Local farmers will be keen to sell seasonal produce before they spoil, and you’ll likely get a great deal in the process. It can also lead to great marketing and an awesome brand identity for your business as a location that supports the local community and serves unique, seasonal dishes. If your dishes keep changing, customers will have a reason to visit your restaurant time and time again!

4. Get Creative with Older Ingredients

If some of your ingredients haven’t been used yet and are getting a little close to their use-by date, but are still perfectly good, consider turning them into longer-lasting items. For example, you could pickle certain vegetables or turn fruits into jam to make them last much longer, or even turn older bread into delicious croutons. As long as you’re using safe ingredients, it’s always a good thing to get creative and reduce your food waste.

5. Automate instead of Overstaffing

Cloud-based restaurant solutions allows you to achieve automation of simple tasks that would otherwise require either additional staff, or existing staff to waste their time. If your restaurant system can take care of the mundane aspects of restaurant management, your talent can focus on what they do best, which will no doubt boost your restaurant’s performance and efficiency!

6. Save on Paper Costs

Going digital is one of the easiest ways to save on costs. Not only can you implement things like Photo Menus (e-menus) which completely relegate the need for paper menus, but you can also utilize things like Customer Facing Displays that offer customers the the option for email receipts.

7. Implement Free Online ordering 

Getting online is an absolute must for most restaurants these days. Acting as a lifeline for many struggling F&B businesses, online ordering can be a godsend, but it can also be expensive. However, using an online ordering system that has no setup fees is a great way to save money, build your business’ online arm and attract more customers all at the same time!

8. Zero-Waste Policy

Notice that customers can’t finish their food portions? Are certain ingredients always getting too old to use? It’s time to take a look at the things in your restaurant that lead to unnecessary waste and cut those things down. Be it portion sizes, certain ingredients, fewer freebies, offering the option for customers to opt out of receiving plastic utensils on delivery orders, or anything along these lines, you could end up saving big, while also helping the planet in the process.

9. Check Your Accounts for Discrepancies

It’s important to keep tabs on the cashflow of your business, where your ingredients are going and whether each transaction adds up. This is where having dedicated back office analytics integrated into your POS is key. If every transaction is logged automatically, you can know what was sold when, how much cash you opened and closed the day with and even make accurate and easy reconciliation reports. Getting to the root of any unnecessary expenses, or even accidental expenses can drastically reduce costs. 

10. Operate a Cloud Kitchen

Though this method may be a little extreme, it can save restaurants who are in real trouble and need a way to reduce costs to the maximum. A cloud kitchen is essentially a restaurant business that operates with no frontage. By only running a kitchen and letting customers order food online, your restaurant can cut costs on rent, décor, furniture, staff, signage, parking spaces, utilities and much more. 

Cut Costs Down to Prop Your Business Up

Cutting costs shouldn’t be something your restaurant business only does when it’s in trouble. You can increase your profit margins by following any number of the above 10 suggestions and making your business run more efficiently. At the end of the day, any savvy business owner would be mortified at simply throwing money away. So, why not assess your restaurant from new angles and cut costs to run a more-profitable business!