Restaurant Cost Control

Restaurant cost controls are an essential part of your business and the analysis of its financial performance. This process is accomplished by setting projections and comparing those to your restaurant’s results. You can then analyze the difference and take corrective measures to eliminate the variance. The costs can take the form of food, liquor, or kitchen equipment and are generally a one-time purchase.

Five central rest high costs will need to be controlled:

Labor
Food
Utilities
Equipment and supplies
POS systems

How do they help?

Understanding your restaurant's cost control will help maximize your restaurant's profitability. You'll be able to recognize your expenses and identify the areas that need attention, saving you money and time that can be dedicated to other restaurant duties.

6 Ways to Establish Restaurant Cost Control

First, you'll want to ensure that your restaurant employee scheduling software reflects the updated wages. It may take some time to set this up manually, but getting the new values inputted as soon as possible is worthwhile. Second, work with your payroll software to ensure that any owed back pay is paid accordingly.

Once all the payroll details are handled, consider making your restaurant work with the wage increases. Here are three ways to establish restaurant cost control without sacrificing staff, customers, food quality, your bottom line, or your sanity.

1. Look at your Menu

If you plan to accommodate the wage increases by adjusting your menu, there are subtle ways to introduce new prices that will make it clear to diners.

Consider how you're writing prices in your menu. There are entire psychological studies on the topic, and research shows that simply omitting a dollar sign when listing prices on a menu can subconsciously encourage your diners to increase their check size.

Menu Engineering

Some menu engineers and consultants (these are actual jobs!) recommend strategically placing the big-ticket item at the top of the menu to make the rest appear more reasonable. Others suggest spreading expensive items throughout the menu—it will all depend on your offerings, your restaurant's culture, and—most importantly—your customers' reactions. Test a few menu types to see which works best for your business.

Long, richly detailed descriptions can help you sell up to 30% more food, according to a study by Cornell. “The more copy you write on the menu item, the less it costs in a customer's mind because you're giving them more for their money.”

Negotiate with suppliers

Review your food costs and see if there's an opportunity to negotiate better prices with your suppliers. Restaurateurs often think this is a fixed cost when it is well within their control to find different, more affordable supplies. Use a procurement management app to keep track of food costs, monitor supply levels, and save time managing inventory.

Standardize menu items

Please keep it simple and support a standardized menu. Some restaurants have rotating menus driven by seasonality, which will cause frequent changes to your budget and overall plans. Standardized menu items consistently remain on your menu all year round. This way, you're limiting the number of cost changes to your restaurant.

2. Track Your Labor Costs

A great way to save money is to monitor your labor costs closely. You'll be wise to schedule mindfully since labor budgets are notoriously thin and inflexible.

Use scheduling software

Put your scheduling software's automatic scheduler function to work! Your schedules should be based on your employee's availability and shaped by historical and projected sales data. You'll keep your labor costs under control because you'll always be appropriately staffed for busy and quiet shifts. With a data-driven schedule, worrying about cutting employees or scrambling to find more staff at the last minute will become a thing of the past.

Notify your team and restaurant staff in advance

If you need another reason to work within auto-scheduling requirements, consider the savings you'll see by simply sending out your schedule earlier. The effect cascades—not only will you have your work completed in advance, but your employees will be able to easily plan their lives around their jobs—something that leads to happier employees. Happier employees with predictable paychecks lead to decreased turnover rates…which leads to decreased hiring, onboarding, and training costs! When you reduce those costs, you'll be in better shape to roll with the minimum wage hikes.

Reduce overtime

Overtime is expensive, even without new wage rates added to the mix. When employees work beyond their set hours, your restaurant's budget bears the brunt of it. The solution? Prevention! When you take advantage of Overtime Alert functions, you'll be alerted when employees are at risk of crossing the overtime threshold and again when employees have officially entered overtime hours.

3. Listen to The Legislation

Rules exist for a reason. The restaurant industry ensures that businesses run smoothly and that employees are respected. By avoiding fines for breaking the rules, your budget will be in better shape to handle the new wage increases.

Avoid costly penalties

Follow Auto-scheduler guidelines. New scheduling practices have been implemented to help protect shift workers in the hospitality sector. Failure to comply results in steep penalties that may threaten a restaurant's existence—penalties that will dwarf the budgetary hassle of newly increased wages. In short, it's best to educate yourself and play by the rules to avoid adding more challenges to your restaurant's plate

4. Track inventory and food costs

What gets measured gets managed. Before you can handle your inventory and food costs, you have to know precisely what you're tracking. There are several important metrics that you can use to keep track of your inventory and food costs. Here are a few metrics and what they follow:

The food cost percentage is the ratio of the cost of food inventory to the revenue it generates.

The Inventory Turnover Ratio tracks how often you sell out of your entire inventory over a given period.

Cost of Goods Sold: How much does it cost to produce a menu item? As you add together all of your menu items

These are just a few more critical numbers you need to know to better track and make adjustments. For more essential metrics and how to track them, check out this guide on restaurant metrics and calculations.

5. Automate manual processes

Some processes can be automated to save time and avoid easy mistakes. Restaurant inventory management software is the best way to track your kitchen inventory digitally. There's a wide range of options available that take the entire process online. Restaurant inventory management software digitizes your invoice and purchases, allowing you to compare costs better and make more informed purchasing decisions. Many services also allow you to add recipes and calculate actual food costs. Some will even make orders for you!

6. Avoid internal and time theft

Unfortunately, sometimes theft can come from within. This can be in the form of straight-up theft of inventory by employees, improper order inputting, or excessive comps. The best way to stop theft is to prevent it at a top level. This starts with paying employees well, providing staff meals, and creating a team culture of accountability and trust. However, more is needed, and modern restaurant tech is here to help. From inventory to sales, current software helps keep track of everything in your restaurant and keep a close watch.