Posted by: Matthew Molinari | April 20, 2012

Cost Control Tips

As the business world continues to grow and the options for companies move closer and closer to their back doors, there is a growing issue that many restaurants are facing. With all the new options, owners are finding themselves with less and less time to do what matters and actually provides value. Perhaps having 10 options for vendors to get meat from is a good thing in some ways but in many ways it leads to a lot of wasted time and money that comes along with micromanaging every aspect of a restaurant.

With that in mind, I’ve got 3 tips that can help restaurant owners save money without having to spend a lot of time. The biggest problem stems from the fact that many people are being pulled in too many directions at once and while they may be able to get a lot done, it is not always done in the most efficient manner. In many cases, it is smarter to cut down on the demands and focus on doing the most important things great.

The first tip is to manage your suppliers by knowing your menu. It doesn’t make sense to get your inventory from 15 vendors if you can get everything you need from 5. By trimming down on the number of shipments coming in and the pile of invoices on your desk, you can save yourself time and money. If possible, try to make one vendor your go-to supplier and get the bulk of your orders fulfilled through them. This will allow you to build a strong relationship and find cost savings by ordering in larger quantities.

Secondly, rethink how you manage your inventory. Inventory can be a drain on resources, space, time and most importantly – money. Obviously, inventory is money sitting on your shelf and you would like to minimize the amount of cash that is tied up. The other big reasons to cut down on inventory where ever possible is waste and manpower.

If you carry large amounts of inventory it is more likely that you will end up having to trash food that is unusable. The less food you keep on hand that faster your turnaround will be which means you will be serving the freshest food possible to your guests while also reducing the amount of waste you have. Try keeping a log for 6 months to determine exactly what items you throw out the most and you should have a good place to start reducing the amount of product you keep on hand.

The other problem with carrying too much inventory is that you have to spend time and money to manage it. It has to be transported from the truck to your shelves and then counted each month. The more you have, the more often you need to clean and reorganize the storage area. All of these task take time and much of that time could be better spent on other aspects of your business.

The third tip is to constantly be evaluating the true cost and yield for each item on the menu. Just because you buy a 5 pound case of lettuce does not mean you bought 5 pounds worth of product. Much of that lettuce is going to end up in the trash because you can’t use the outer leaves or the core. You have to take that into consideration when pricing your menu items as well as the fact that you have to pay someone to prepare all the food before it can be used for cooking.

Never think narrowly about the true cost of doing business and always envision the entire chain of costs that goes into the final product that ends up on the table for the customer. The best way to keep a consistent profit is to make sure that you are charging the proper amount as well as using the proper sizes for the products. You may think giving a customer a certain size sandwich makes sense until you actually add everything up and realize the amount you charge for it barely covers the labor of getting all the materials together.

In the end, the overall goal is to simplify your back of house so that you have the time to manage all the little things that will end up costing you money. These small things aren’t the most glamorous but in the long run they will definitely help you provide a better product while maintaining the largest profit margin.

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Responses

  1. I see the same thing in laboratory science – you have to factor in the value of your own time when choosing vendors. Sometimes it’s the right choice to order many things at once from the same vendor – even if you know there may be someone else with 5% or 10% lower price out there.

    • Thanks for the comment. It’s funny how these types of theories transcend the boundries of business, science, personal life, etc. It just goes to show that in many ways good ideas can be universally applied regardless of what segment they originated in.


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