How to Cut Costs for Bars, Cafes, and Restaurants – Part 2

Cutting costs is a great way for restaurants, bars, and cafes to increase profitability. The food and beverage industry runs on such tight margins that even a few small cuts here and there can add to the bottom line.

In part one of this two-part series, we covered how most food and beverage businesses spend (on average) 85% to 95% of all revenue on operating costs and staff leaving only 5% to 15% of profit. By decreasing costs using the Pareto principle, being efficient with energy, and optimizing your marketing budget, you can start to decrease your spending.

We’ve compiled more ways in which a restaurant or bar or cafe can cut costs.

Loss Prevention and Shrinkage Procedures

Make sure you have systems in place for proper tracking of cash and items. That means creating procedures for managers to sign off on and track spilled liquor, food inventory, cash, staff meals, uniforms, and other items. Develop a culture of loss prevention that encourages your staff to care about shrinkage by communicating how shrinkage affects them personally along with the business.

Optimize Your Staff and Hours

One of the best ways to reduce costs is to optimize staff and opening hours. The key here is to have the right amount of staff available at the right time and to make sure that every hour you are open adds to the bottomline. We’ve already written about creating custom store hours to maximize sales, but the short version of it is you can use your point of sale data to discover trends and insights about when you’re historically busiest. The Aislelabs platform is a fantastic way to automate generating this data.

Another benefit of optimizing staff means you can increase morale by not overworking the staff due to being understaffed. An optimized staff means bigger tip payouts for them which, in turn, reduces turnover. Training new employees costs more than keeping your current staff and with a 60% turnover rate for the industry, that’s quite a lot of expenditure.

Don’t Be Too Frugal

The final tip is more of a warning. The goal is not to make cuts so deep that it hurts your brand or causes more costs. Cutting costs means trimming the fat to optimize operations but taking into account overall quality. Simplifying a menu to the most popular profitable meals is a great way to optimize your offerings but using substandard ingredients will hurt your brand. Make sure your optimization provides a better experience for employees and customers alike while increasing revenue.

Of course, along with part one, these lists are in no way comprehensive but are rather just a significant starting point. Looking at your unique business expenses with a critical eye can help you uncover inefficiencies and new ways to trim the fat.

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Aislelabs is the leading global provider of enterprise software for marketing automation, location analytics, predictive intelligence, and combining online and offline customer touchpoints. The company serves customers across verticals including retail, transportation, hospitality, venues, and F&B.

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