Running a restaurant or bar is a hectic job – you’re in charge of staff, customers, budgets and overall management of valuable food and beverage inventory.
Each day can present new challenges and problems to solve, as can slower seasons and competition from other establishments in your neighbourhood.
Successful food and beverage providers know that it’s often the hidden losses that can slowly leak profits out of your bottom line. Profitable restaurateurs also know how and where to look for every cost saving. It’s all about knowing all the places your expenses originate, so you can control for each dollar you spend.
So if you’re opening a new bar or restaurant, or looking for ways to boost your existing business practices and profits, here’s our round up of key areas you should focus on to make more money in 2020.
1. Labor Costs and Staffing
Paying your staff is a huge part of your overall budget. With rising minimum wage standards and annual cost-of-living increases, you need to stay on top of your labor costs with effective staff scheduling.
Follow the 15-minute rule. Can you reduce 15 minutes a day in each staff’s schedule, without compromising the quality of overall service and customer experience? For example, can your evening shifts start at 4:45 p.m., instead of 4:30 p.m., for proper dining room set up and kitchen prep? If the answer is yes, you can save a significant amount of money each week, month and year. Using the 15-minute rule with just four staff per shift, saves an hour’s worth of wages each day, which can add up to thousands of dollars back into your budget each year.
2. Purchasing Food and Beverage Inventory
When you own a bar or restaurant you never want to run out of food, but you also never want to have too much inventory. Both ends of the inventory spectrum can cost you money that would otherwise stay in your bottom line.
Precise and timely ordering is paramount to controlling your costs and protecting your profit margins. Plan well and be accurate with your orders. Use industry tools like Inventory Turnover Ratio and Periodic Automatic Replacement (PAR) systems in your regular food and beverage inventory management.
At the same time, you can make your purchasing practices even more effective by working proactively with your inventory suppliers. Talk to your suppliers about potential seasonal fluctuations in the prices of special ingredients such as lemons, limes and avocados and order less or purchase alternatives when necessary. Consider modifying portions in your recipes during leaner times to keep the cost of off-season or speciality ingredients from taking over your profit margins.
You should also open every box or case of fresh meats and produce received, and ensure you are getting exactly what you paid for. Sometimes food distributors will check boxes of fresh produce before delivery and remove any damaged or spoiled goods. But if your supplier doesn’t know this, you’ll still get charged for the count or weight marked on the box. Check your new inventory carefully, and work with your suppliers to adjust any price differences, each and every order.
3. Occupancy and Operating Costs
There are other important costs to running a bar or restaurant: keeping the lights and water on, and paying for the roof over your establishment.
Utilities including heat, water, and electricity are all part of your general operating costs, and your rent, lease, mortgage, property taxes and insurance are all types of occupancy costs.
You generally can’t get around paying for these types of essentials for your business, but there are ways to keep their costs tightly controlled.
For example, make upkeep and inspection of your equipment a regular part of your weekly or monthly operations. Check for leaks, cracks, dirty filters, plugged drains and anything else that could cause spikes in your utility bills or costly repairs. This includes checking your dishwashers, heating and cooling systems, vents, stove tops, ovens and water coolers. Just a few dollars wasted a day with faulty or broken equipment can add up to thousands of dollars eaten up by unnecessary spending.
4. Recipe Costing
One of the fundamental aspects of successful restaurant and bar management is beverage and food costing: the difference between the cost to you to prepare a recipe or menu item and the amount you can charge your customers for that item.
There are many tips, tricks and tools you can use to help cost your recipes properly. These include beverage and food cost calculators and related software; but recipe costing also involves training your staff to follow prep instructions carefully and accurately.
Spend time in your kitchen and ensure your staff are measuring out portions correctly. Does three ounces of lettuce mean the leaves are loose or packed when weighed? When you cost out the price of olives for your bar inventory, are you costing by the number of olives you use, or their weight packed in water by the jar?
Recipe costing is detailed work, but the payoff to your bottom line is worth every effort.
5. Condiments and Extras
The cost of food and bar inventory going out on your plates and in your cups is one measure of your profitability. Another is the cost of any complimentary extras you provide for your customers.
First, your staff have to be trained to accurately measure out any side condiments such as mayo and mustard, so you aren’t losing potential profit to waste or overportioning; ditto for controlling the cost and amount of any complimentary bread you offer to guests before their meals are served.
But also take a look at the condiments that you might leave on your tables such as hot sauce, vinegar and ketchup. The cost of these extras need to be factored into your budget, as well as the cost of regularly cleaning the bottles out and refilling or replacing them with fresh product.
These types of little extras can add up to big leaks in your profits, yet they easy costs to control with just a little effort.
6. Take-Out and Delivery Packaging
In the current era of third-party ordering and delivery, it’s important to include the cost of all your packaging for take-out and delivery. If you include these types of convenience services for your customers, your menu prices must include the cost of dine-out packaging.
Everything from the food and beverage containers themselves, to solo cups and lids for sauces and dips, extra napkins, single-serving condiments and disposable cutlery are costs you have to recoup from your menu prices. This also applies to packaging you purchase and provide for customer leftovers.
Even when take-out and delivery orders make up as little as 25% of your total sales, the packaging costs for those orders need to be reflected in your overall budget and prices to help your business stay in the black.
7. Portion Control
Save both time and money by controlling kitchen prep and keeping your serving sizes consistently accurate. Good portion control is all about setting and maintaining guidelines for how much of what ingredients go into each dish and onto each plate.
With good portion control, your customers get the perceived value they’re in search of and you reduce your food and labor costs. Remember, real cost savings are all about realizing the power of multiples. Even the smallest costs add up to big cuts to your profits when they happen daily, weekly and monthly on a regular basis.
If you’re wondering how you can tell if your portion control practices need sharpening, start by watching how much and how often food is being scraped off customer plates and into take-out containers or the garbage. For example, do you serve extra large portions of fries with your burgers to enhance the perceived value of your menu? If your customers aren’t eating all of the food or drink you serve, that small cost per plate adds up to real cuts to your bottom line.
There are lots of portion control tools to help you and your staff curb waste and loss. It also helps to make sure your staff know the exact cost to you of every food and beverage inventory item, so they think twice before letting anything hit the floor or garbage bin.
8. Liquor Inventory
Inventory and prep practices behind the bar can drastically affect your budget and bottom line. Taking control of your liquor and bar costs is worth every effort as part of your overall inventory management overhaul.
It’s easy to waste product and lose money from overpouring drinks at the bar. Don’t train your staff to eyeball what’s being served; they need to be consistent by measuring with the right tools you supply in your bar. Just one ounce extra out of a wine or liquor bottle and into each customer’s glass adds up to a lot of lost profit when it’s 500 glasses or more served a week.
Keeping your bar equipment in good working order and at the right temperature is equally important for inventory like beer on tap. If your kegs are too warm, the beer will have more foam, and your staff will literally be pouring your profits down the drain with every glass served.
Go an extra step further by maximizing both your inventory management and marketing strategies: print your logo onto your barware as both an advertising and measurement tool. With the bottom or top of your logo marking the level at which you want your drinks to be served, it’s that much easier and faster for your staff to consistently pour out each drink with total accuracy.
Investing time and effort into training your staff is an essential part of effective restaurant management. Your ability to reign in unnecessary spending and wasted inventory will always require the help, knowledge and diligence of your staff.
Your business can suffer if you have inexperienced or untrained team members who don’t understand how to balance customer service with cost-effective solutions. Everything from accurate and consistent food prep and portioning to menu substitutions can cost or save your business thousands of dollars a year.
It’s critical that your staff know your expectations for meeting both your customer and business needs.
10. Inventory Management Software
In today’s digital era, managing your inventory can be both easy and effective. You don’t have to struggle with the frustration of pen and paper records or computerized spreadsheets. Professional, well-designed restaurant software makes it easy to boost your profits and performance.
With trusted restaurant inventory management software like Optimum Control, you have dozens of key features at your fingertips to support your cost-saving measures. Track all of your inventory counts and values, scan barcodes for fast entry, calculate recipe values and food costs, automate your ordering and purchasing processes, and even produce real-time reports to stay on top of all your costs, profits and inventory needs.
Easy to use and install, Optimum Control also integrates with your existing POS and accounting systems and can be used on your desktop or iOS devices – even across multiple revenue centres and multi-unit chains.
So if you’re looking to implement or upgrade your inventory management, you’ll want to try restaurant software like Optimum Control.
Schedule a free demo or talk to us today and start saving real time and money in your bar or restaurant business.