The food and beverage industry operates with infamously razor-thin profit margins. Every penny counts when you run a restaurant, and operational inefficiencies or waste can quickly snowball into significant budgetary issues.
Keep reading, and we’ll explore 6 surprising areas that may be costing your business more than you expect.
Food Waste & Spoilage
Food waste and spoilage are major expenses throughout the food and beverage industry. Most commercial kitchens waste around 4-10% of the food they purchase. That means if a restaurant has a budget for $1 million for food each year, they could be losing between $40,000 and $100,00 per year.
When food is wasted, you not only lose the direct cost of the food, but you also lose out on the potential profits from the meal that the food would make. Food waste is also an issue that can affect where customers choose to eat. A report shows that 72% of diners care about how restaurants handle food waste, and 47% are willing to spend more to eat at a restaurant that actively recovers food.
Fortunately, there are steps any restaurant can take to cut down on food waste, including:
Designing menus to cut waste, reduce the number of ingredients, and reuse food trimmings and overproduction
Offer different portion options, smaller plates, and trayless dining
Work with suppliers to optimize pack sizing
Use food waste tracking systems to understand where, how, and why food is wasted
Hold regular trainings and reward achievements for reducing food waste
Implementing these steps can help restaurants cut their food waste by up to 20%. Optimizing food waste practices could help the food and beverage industry save up to $2 billion in profits every single year, all while recovering 1.8 billion meals, conserving 1.6 trillion gallons of water, and cutting 18 million tons of greenhouse gas emissions. Creating more sustainable food waste practices is good for the planet and your budget.
Utilities and Energy
Between lighting, water, air conditioning, heating, and all the appliances that fill up a kitchen, utilities can be a major expense for any restaurant. Fast food establishments generally pay around $2,800 per month for electricity, while full-service restaurants are paying an average of $2,300 per month. Most restaurants also pay around $8,000 per year for water.
Any savings on these utilities can have a big impact on your budget. Imagine a full-service restaurant with a popular entree that costs $23 and the average monthly electricity bill of $2,300 per month. If they can reduce their electricity usage by 10%, they will save around $230 per month, the equivalent of serving 10 additional popular entrees. But while serving additional entrees may have a low profit margin due to the cost of materials and labor, saving on utilities is pure profit.
Here are some steps you can immediately take to reduce your restaurant’s utility bills:
Switch to Compact Fluorescent Lightbulbs
Use occupancy sensors for lighting in rooms like bathrooms or storage areas
Use programmable features to turn off equipment or manage thermostats and lighting
Change equipment and HVAC filters
Replace old equipment with high-efficiency appliances
Regularly audit your appliances, HVAC, and plumbing systems for inefficiencies
Identifying and eliminating these utility and energy inefficiencies could help restaurants save thousands each year. Focusing on these environmentally friendly practices can also contribute to an eco-conscious image that many customers prefer.
Labor Inefficiencies & Scheduling Mistakes
Labor is one of the most significant expenses for any restaurant, but many establishments still rely on outdated and inefficient practices to schedule their staff. Most restaurants rely on basic staffing templates and the manager’s best guesswork when scheduling, but this can quickly lead to understaffed peak periods, service bottlenecks, and overstaffed off-peak periods.
Thanks to dynamic scheduling software, there are better ways to manage your scheduling. Instead of managing schedules through chaotic group texts or bulletin boards, find a scheduling platform that can analyze your restaurant's traffic and provide an accurate labor forecast.
Many of these platforms offer convenient tools like automated shift reminders, built-in alerts, and real-time tracking to help ensure adequate coverage without overstaffing. They can also help prevent the added expense of overtime.
Facility Maintenance & Repairs
Maintaining your facility and keeping your equipment running will always involve some level of expense, but neglecting regular maintenance can lead to huge, unexpected price tags. Equipment breakdowns can lead to expensive unplanned service calls, pricey part replacements, and even perishable food inventory loss.
Many restaurant owners choose to delay, or even skip, regular maintenance schedules to find short-term savings, but that often ends up costing them more in the long run. If you avoid routine maintenance, minor issues can snowball into major problems that require pricey emergency repairs.
When something does break down due to lack of maintenance, you may have to pay high service fees for emergency repairs or expensive shipping costs for overnight parts. Equipment breakdown could result in food spoilage, lost sales, and unhappy customers, further cutting into your budget.
Keeping a consistent maintenance schedule can help you avoid these unpleasant surprise expenses. Management software programs can help you track inspections, service intervals, and equipment lifespan, so you know when to repair or replace your equipment.
Sourcing your appliances from a good supplier can help as well. Finding a reliable, quality supplier that offers warranty support may be more expensive initially, but it can pay off in the long term as you avoid expensive repair costs and frequent breakdowns.
Vendor Issues
The supply chain is another area that costs restaurants a lot. Price adjustments, delivery delays, and hidden fees can sneak into your budget. If you exclusively rely on specific vendors, any issues that their company has will affect your business as well.
As you run your restaurant, take the time to build strong relationships with a diverse range of vendors. This will ensure that you have plenty of options to choose from if shortages or price hikes occur, and as you build these relationships you may get better benefits from being a long-term partner.
Take a close look at your vendor invoices, as well. Many vendors sneak in hidden fees or use confusing inventory practices to inflate your bill. A regular audit of your invoices can keep these costs from piling up.
Mismanaged Uniforms and Linens
Clean, professional uniforms and crisp linens can make or break the dining experience for your customers. If you operate a more formal establishment, your guests will expect quality and cleanliness, every time.
There are a few ways to care for your uniforms and linens. You can wash them yourself, but many commonly available washers are not equipped to handle the grease, stains, and wear and tear on restaurant uniforms and linens. Washing your own linens and uniforms can lead to inconsistencies in quality and lost inventory.
Handling uniforms and linens in-house also requires an upfront investment in the products themselves. If inventory is lost or you don’t have enough for a busy night, you’ll have to purchase more. As new employees join, you have to buy new uniforms and pay for any embroidery or tailoring services. And when old employees leave, they may forget to turn in their old uniforms.
A uniform and linen rental service, like Alsco Uniforms, can help. Our regular delivery service ensures you have what you need, when you need it, for a consistent cost. We work with your team to determine how many uniforms and linens you need, tailor the uniforms to your team, and pick up your soiled laundry when we drop off your hygienically clean products.
Our managed rental service can make uniforms and linens a more predictable expense for your business. Our uniforms feature RFID tracking to prevent inventory issues, and we’ll handle any repairs or replacements. We have an open, transparent billing process and a simple account management system if you need to make any adjustments.
How to Save $100,000 Per Year at Your Restaurant
If you’re looking for specific, proven, and actionable strategies to save money without sacrificing the quality of your restaurant, read our whitepaper. We walk through 5 strategies you can take today to reduce up to $100,000 in annual overhead.