As you map out a restaurant business plan or tweak your most recent version, financial data and projections are likely an important section. Reducing restaurant costs should be a primary focus whilst sustaining stellar customer service.
Thanks to innovative restaurant technology, there are numerous ways to cut expenses. Some may opt for organic strategies to lessen their restaurant marketing budget. Others might use a restaurant inventory management app to cut back on waste. Regardless of which route you go, there are many ways to help you spend less.
Before jumping into the seven ways you can cut restaurant expenses, let’s learn a bit more about the topic.
Knowing which restaurant expenses have the most impact is vital. Scaling a business can cost a substantial amount of money, so it’s crucial that you’re strategic with business funds.
With these ideas in mind, let’s take a closer look at various restaurant expenses.
Startup Restaurant Costs
If you’re not yet a business owner but planning to open a bar or restaurant, there are several one-off expenses you’ll face. Upon starting a business within the restaurant industry, get estimates for the following expenses:
- Licenses and permits
- Legal assistance
- A branded and professional website
- Restaurant decor
- Liquor bottle display cabinets
- Physical menus
- Cookware, dishware, and glassware
- Rent and utilities depending on location
Are there ways to snag most of these items on a tight budget? Absolutely! However, they’re necessary and can add up quickly.
With this in mind, work with an initial startup fund, then continue to grow with a more standardized budget.
Restaurant Monthly Expenses List
There are several restaurant expenses to add to your monthly budget. Here’s a list of costs you’ll incur each month:
- Rent and utilities
- Accounting and bookkeeping services
- Restaurant POS platform
- Restaurant food cost
- Staff and labor
- Restaurant equipment
- Marketing and advertising
- Third-party app integrations
Ensure that none of these restaurant expenses cause you to exceed your budget. If you should run into this error, reevaluate your budget and strategy.
Restaurant Expenses Spreadsheet
If you don’t have an automated system, use a restaurant expenses spreadsheet. This can be in a platform like Google Sheets or Microsoft Excel–it’s up to you and your preferences,
Be sure to utilize formulas for various financial figures. This may include total revenue, net profits, a marketing budget, and so on.
Spreadsheet formulas help to simplify restaurant data analytics and ensure accuracy. If you calculate equations manually, you may run the risk of inaccurate numbers. After a while, this could steer your business in the wrong direction.
7 Ways to Cut Restaurant Costs
Ready to cut back on restaurant expenses and scale your business? Keep readings to learn about simple ways to maximize your budget.
1. Track and Manage Inventory Control
Food costs can be one of the biggest restaurant expenses you can face. By removing the guesswork, managers can shop for the best prices in a wholesale directory and order exactly what they need.
Between routine deliveries and an accurate reorder point for each shipment, restaurant owners can say goodbye to guesstimating order quantities and dates.
2. Eliminate Food Waste
Food waste is one of the most impactful financial losses for restaurants. With an abundance mindset, business owners can quickly discard a week’s worth of food–or more.
Sadly, this occurs due to uncertainty of what will sell. It’s not ideal to tell a customer that you’re out of a menu item. However, it’s even worse to expand your budget due to the cost of food spoilage and shrinkage.
Unless it’s something like dairy products, such as milk or eggs, making assumptions about influxes of specific orders is unrealistic. Plus, food waste doesn’t nurture sustainability efforts for those trying to operate eco-friendly restaurants.
3. Minimize Labor Costs
Ensure that you train your staff on multiple duties. This way, teams can accomplish that much more during their shifts, even on days with fewer people available.
4. Replace Manual Processes With Tech Solutions
If you decide to scale down the size of your team to lessen restaurant expenses, there are also ways to eliminate their duties to prevent work overload.
Tech solutions can also help eateries that already have minimal teams. Just a few ideas include:
- Pay-At-Table Devices: Why make customers wait to place their order or pay the bill when all of this can be done on a tabletop device? Plus, they boost the table turnover rate, which is vital for increasing the restaurant profit margin over time.
- QR Codes: Use custom QR codes to display menus. By doing so, customers won’t have to wait for their server to retrieve menus. If your ideal customer profile prefers quicker service, this feature will be super convenient.
- Self Ordering Kiosks: In casual dining eateries, customers can order food independently and have a seat. This way, they won’t have to rely on waiters.
5. Offer Food Delivery
Food delivery is a great strategy for numerous reasons, several of which include:
- It’s simpler for online orders to achieve higher cart values with features to help upsell purchases.
- A restaurant loyalty program can be integrated within the customer’s profile.
- Live order monitoring makes it simple for customers to track deliveries.
- Customer data shows us that people are more likely to spend more on an app than they would in person.
6. Evaluate Menu Items vs. Their Costs
As inflation causes food costs to rise, certain menu items can become much more expensive to prepare. With this in mind, take the time every month or so to estimate the cost of each dish. Or, once you notice price changes for must-have items.
Without even realizing it, you could be serving entree food or items off the dessert menu that barely turn a profit. The last thing you’d want is to not generate any ROI. Remember, the ROI meaning refers to the amount of revenue you generate vs. the amount you invest in the business.
7. Opt For Organic Marketing Efforts
A marketing budget can cost restaurants a small fortune. With this said, opt for organic methods to boost traffic and sales.
Social media marketing is probably the most effective way to promote a business with a minimal budget. Sometimes, brands don’t even invest in social media efforts.
Consumer data shows that people spend a large portion of their day scrolling through social media apps. Allow your restaurant to gain exposure by completing the following steps:
- Optimize your profiles
- Post high-quality photos
- Write catchy captions
- Use relevant hashtags
- Engage with other accounts
- Be consistent
Before tracking data, ensure you know how to measure the social media ROI. This figure will inform you of performance, as well as what could use some improvements. It’ll be a great restaurant KPI to track, as it says a lot about the target audience.
Frequently Asked Questions About Restaurant Expenses
Keeping up with restaurant costs is essential for seamless operations. If you’re unaware of financial data, you’re bound to run into obstacles along the way. Without further ado, here are some topics that people often question in regard to restaurant expenses.
What Are Restaurant Expenses?
Restaurant expenses can include the following items:
- Labor costs
- Kitchen inventory
- Third-party apps
- On-site technology
- Marketing and promotions
- Rent or property expenses
What Is the Biggest Expense For A Restaurant?
The biggest expense for a restaurant is the labor cost. Restaurant owners need to pay their staff a salary, and training is an expense, too.
What Are Four Types Of Costs A Restaurant Can Have?
The four major types of restaurant costs include:
- Food costs
- Liquor costs
- Labor costs
- Operational costs
What Are the Main Expenses In the Kitchen?
One of the largest expenses in the kitchen is food inventory. Inventory is a recurring cost, and there is much room to exceed your monthly budget. With this in mind, it’s crucial that you acquire effective inventory management processes.
How Do I Make A Restaurant Budget?
If you’d like to budget your restaurant expenses, follow these steps:
- Make a list of all of your costs.
- Determine where you’d like to store your financial data. For these matters, we recommend something like Microsoft Excel or Google Sheets.
- Calculate how much revenue you generate each month.
- Input the proper formulas so that you can simplify data management.
- Monitor your numbers on a daily or weekly basis to track growth.
Restaurant Expenses Breakdown
Now that you know of all the various restaurant expenses, it’s time to nurture the financial health of your business.
Though it can feel a bit overwhelming at first, it’ll put you in a much better position in the future. Financial literacy is the key to successful businesses. Always remember that this concept begins with acknowledging all of your expenses.