It’s a tough time for the restaurant industry. One way to make it through is to keep a careful eye on costs. Although there is no silver bullet to solve all cost-related challenges, there are a few key principles that, when implemented correctly, will save you both headaches and money.
1. Food costs
Food costs (‘the cost of goods sold’, for the accountants under us), are the most obvious starting point when it comes to managing expenses. Managing food costs often comes down to waste management. Luckily, there are multiple preventive measures you can use to tackle this, such as proper storage, menu engineering and portion control. Negotiating with suppliers can also help, but let’s be honest: good relationships matter more than finding the cheapest produce.
2. Labor costs
Labor is another big chunk of your expenses. One minute you’re fully staffed for a dinner rush that never comes, and the next you’re understaffed during brunch madness. One solution can be smart scheduling – using historical data to predict busy times and avoid overstaffing during the lulls. Also, a lot of restaurants’ interiors aren’t optomized in a way that makes it easier for fewer staff members to run the room, so there might be room for improvement there, too. What you should not do however is try to underpay your staff or in any other way severely worsen the workplace climate, as this will only lead to higher turnover, which will increase your labor costs.
3. Utility costs
Utility costs are the silent killers. You don’t think about them until the bill shows up in your inbox. Luckily, there are many ways to keep the bill as low as possible, while combating climated change at the same time, ranging from simple measures such as keeping an eye on the thermostat and water usage, to more costly measures that might require some new utilities (how old is your fridge?) or even construction (such as adding more isolation or implementing a green roof or facade).
4. Overhead
Fixed costs like rent, insurance, and other overheads are often out of your immediate control, but that doesn’t mean you should ignore them. Lease negotiations are tricky, but if you’ve been around a while, don’t be afraid to push for better terms. Also, make sure your marketing efforts aren’t just burning money – focus on campaigns that offer real ROI.
5. Ownership
Here’s a principle that often gets overlooked: your staff can either help you control costs or they can unwittingly drive them up. Training your team to think like owners means empowering them to make smarter decisions, whether that’s reducing food waste, being mindful of energy use, or simply upselling high-margin items. The more they feel like they’re contributing to the success of the restaurant, the more accountable they’ll be in keeping costs in check. Of course, this is much easier to do if staff members can noticeably profit from the benefits of this tactic as well.
At the end of the day, running a restaurant is a balancing act. Costs will always be there, but if you can get a grip on these five areas, as well as others, you might keep them from spiraling out of control. Alternatively, ask one of the many financial experts that you can find within the FCSI membership.
Marius Zürcher
About the author:
The co-owner & founder of Millennial & Gen Z marketing and employer branding agency 1520 in Apeldoorn, the Netherlands, Marius Zürcher was a participant at FCSI’s ‘Millennials’ focused roundtable at INTERGASTRA and a speaker at FCSI workshops about industry trends.
