How Restaurants Can Increase Margins Without Affecting Quality
The restaurant business is famous for its low margins. Entrepreneurs in the sector are lucky if they make a 5 percent profit on the meals they sell after wages, taxes, and rents are taken into consideration.
Trying to increase profits by lowering costs, though, doesn’t always work. Customers notice, and it affects demand and reputation. If people think your food is poor quality, they will stop coming.
The trick here is to get the balance right. You want to find ways to lower costs without impacting your core product in a negative way. Here’s what to do:
Prepare The Labor Schedule According To Demand
Many restaurants apply a regular labor schedule as if demand didn’t fluctuate throughout the week. They lay on two members of staff at Monday lunchtime when there are five customers and two on Friday night when there are thirty.
This approach to business harms your enterprise in multiple ways. First, it increases your labor costs to higher than they need to be. Many business owners spend a small fortune in wages, only to have employees standing around, not being productive.
Secondly, it harms the customer experience. If the wait staff is too large, then it can be uncomfortable to dine. And if it is too small, orders get mixed up and food takes ages to prepare.
Cut The Acceptable Length Of A Shift
The old saying goes that work will continue to expand until it fills the time available for completion. It’s one of the reasons why Ph.D. students almost always spend the full allowable five years doing their research. That’s the time they have available, so that’s how long they take.
To combat this, take a closer look at how employees are spending the last one to two hours of their shift. If they are highly productive, then it’s a sign that shift length is correct. However, if they appear idle or work slower than usual, consider cutting the length of the shift by 15 minutes but demanding that they complete all work in that time frame.
Change Your Suppliers
Preparing fresh food in a restaurant is notoriously expensive. That’s why most don’t bother. Instead, they outsource food preparation to third parties and simply assemble meals when customers order.
The trick here, though, is to find the right suppliers. For instance, if you can find a chili bowl caterer who provides a delicious base you can use for multiple meals, then you’re on to a winner.
Don’t Allow Employees To Take Trash To The Dumpster
Many employees will attempt to steal discarded products en route to the dumpster. Therefore, always keep the kitchen backdoor locked and install a panic bar to sound an alarm if there is an exit. Set specific times for trash disposal, and always send a manager to monitor the process.
Lower Inventory Levels
Lastly, consider lowering your inventory levels. If you have more food on your shelves than you really need, consider how much you actually use and whether the risk of keeping it is worth it.