• About
  • Mortgage Basics
  • $40K Challenge
  • Aunt Doris
  • Grandfather Says
  • Privacy
  • Archives

Len Penzo dot Com

The offbeat personal finance blog for responsible people.

How to Keep Costs Low When Opening a New Restaurant

By Sabado Domingo

The coronavirus pandemic has shown that a profitable solid business can go bankrupt overnight. Take bars and restaurants, for example; most of them were shut for more than a year all over the world – or they were allowed to open after a temporary shut down, only to be forcibly-closed again later.

Today, the food and beverage sector is slowly recovering, and every restaurant manager or business owner has tried to find ways to reduce costs in an effort to maximize profits.

Let’s face it; there are only so many family members you can employ to hold costs down. With that in mind, here are some additional excellent solutions that can help keep your restaurant expenses to a minimum:

Eliminate low-profit items

You don’t want to end up asking for restaurant financing in order to pay for food or menu items that do not bring too much profit. High cost items typically do not sell very well. Plus, the profit is low, so there’s no point keeping them; they will bleed you dry.

Also, if certain menu items aren’t selling, simply get rid of them – and then replace them with items your customers actually ask for and appreciate.

Reduce portion sizes

If people love your food, but you end up with leftovers on plates, you are obviously wasting money. So if you find your portions are too large for most people, reduce them. They are less likely to notice it, and you will manage to save some money.

Of course, everything is in balance; at some point, portion sizes get so small that customers will go away feeling hungry. And never come back.

Avoid waste

It is perfectly normal to have food ingredients that get old. After all, it’s impossible to tell what your guests will order, how busy it will be, and so on. The good news is slightly old ingredients can often still be used; you just need to use your creativity. For example, is the bread not fresh enough to be served with a soup or stew? No problem; turn it into croutons.

Keep a daily inventory

Knowing what you need is essential to keep costs low – and a daily inventory is a necessity for every restaurant out there. So stick to the ten most popular products and try to make as much as possible out of them.

You will also need to observe trends. For example, there are probably certain ingredients get used more during weekends; while others are used consistently throughout the week. You can also match the inventory with the point-of-sale (POS) results. If they do not match, chances are your portions are too large, or you are wasting too much food. Employee theft is also worth some consideration.

Minimize the number of suppliers

It is true; it’s virtually impossible to get everything from one supplier. But then, it helps to get everything from as few suppliers as possible. This is not a general rule. Some suppliers sell things cheaper than others, so you do need to do your homework and shop around.

You should also always be trying to strike deals; especially if you do manage to buy everything from one supplier.As you consolidate such a relationship, you can usually negotiate much lower prices.

You can also consider bulk orders.

Don’t over-staff

More and more restaurants are keeping extra staff on hand to deal in an attempt to keep customers happy. After all, you do not want your customers to wait for half an hour to get an omelet or 10 minutes to get a drink. On the other hand, carrying too much staff on hand eats into your restaurant’s profits. So it’s up to you to find the perfect balance.

Every restaurant out there has some slow periods and busy periods – there are times when employees run around like headless chickens, and there are times when they stand around with nothing to do. So you need to identify these distinct periods and schedule accordingly.

The Bottom Line

There are lots of ideas to reduce your restaurant running costs, and while they will not make a massive difference straight away, they will work wonders in the long run. Remember, each restaurant is different, and what works for some of them will not work for every business out there, so it’s best to try multiple options in order to figure out what works best for you.

Photo Credit: stock photo

May 31, 2022

The Question of the Week:

Did you buy any fireworks to celebrate Independence Day this year?

View Results

Loading ... Loading ...

Recent Posts

  • What to Look for When Purchasing a Medical Alert System
  • What Everyone Should Know Before Depositing Their Money In a Bank
  • Black Coffee: Born on the 4th of July
  • How To Start Investing In Cryptocurrencies
  • Grandfather Says: The Travails of Working with Stone
  • 5 Expert Tips for Saving Money with a Credit Card
  • How to Implement Strategic Planning Processes
  • Is It Better to Borrow From Your 401k or Take an Early Withdrawal?
  • When It Doesn’t Pay to Buy Big-Ticket Items on Sale
  • Black Coffee: Digital Castles in the Air

Disclaimer

This site is for informational and entertainment purposes only, and the content herein should not be mistaken for professional financial advice. In fact, making investment decisions based on information published here, or any other website for that matter, is more than unwise; it is folly. This website accepts advertising in the form of monetary and other compensation; as such, topics of discussion are occasionally influenced by these advertisers. Sometimes, an article may also include affiliate links, meaning, at no additional cost to you, this blog earns a commission if you click through and make a purchase (for example, as an Amazon Associate I earn from qualifying purchases). Remember, you and you alone are responsible for the decisions you make in life, so please contact an independent financial professional for advice regarding your unique personal situation.

Sign up for the weekly Len Penzo dot Com newsletter
Len Penzo dot Com Delivered Weekly
Join more than 40,000 readers and fans who enjoy personal finance and macroeconomics with an offbeat twist!
Invalid email address
Thanks for subscribing!

Popular Now:

  1. 1. The 6 Most Valuable Grocery Store Products
  2. 2. Series I Savings Bonds Are Now Paying 9.62%; Here Are Their Pros & Cons
  3. 3. 25 Examples of Shrinkflation That No Longer Fool Consumers
  4. 4. 7 Big Reasons Why a Roth IRA Isn’t the Best Way to Save for Retirement
  5. 5. 3 Ways That Great Sleep Helps You Get Richer
  6. 6. What’s the Fastest Way to Pay Down Your Mortgage Early?
  7. 7. How to Save Money on Dental Care So You Won’t Go Broke at the Dentist
  8. 8. Historical Gold & Silver Benchmarks for Wages and Commodity Prices
  9. 9. Tip Inflation: We’ve Got Nobody to Blame But Ourselves
  10. 10. 4 Good Reasons Why Some Quarters Are Painted Red

All-Time Most Popular:

  1. 1. 19 Things Your Suburban Millionaire Neighbor Won’t Tell You
  2. 2. Dear Friend: Here Are 41 Reasons Why I’m NOT Lending You the Money
  3. 3. Why Your Expensive Luxury Car Doesn’t Impress Smart People
  4. 4. If You Can’t Live on $40,000 Annually It’s Your Own Fault
  5. 5. 21 Reasons Why Corner Lots Are for Suckers
  6. 6. 4 Smart Reasons Why College Isn’t for Everyone
  7. 7. 18 Fast Facts About Social Security Numbers
  8. 8. My Ketchup Taste Test: Upset! Guess Which Brand Topped Heinz
  9. 9. Why I Prefer a Spreadsheet to Track Expenses and Manage My Finances
  10. 10. Here’s a Simple Trick for Getting Credit Card Interest Charges Waived

Copyright © 2022 Len Penzo dot Com · All Rights Reserved · Designed by Nuts and Bolts Media

© Len Penzo dot Com 2008–2022