Any operation in the restaurant business is closely related to costs and profits. One wrong step and you can reduce your profit to zero.
Therefore, it is so important to constantly consider, plan and forecast cash flows, monitor financial performance, keep records and understand all the difficult terms that a P&L report shows. In other words, everything about finance is an important part of the job of a restaurant manager.
Planning and budgeting is the basis of the financial part of the restaurant business, since all subsequent measures for the distribution of resources and profits will come from a given plan.
However, no one is safe from the onset of emergency situations and force majeure, when it is important to optimize costs and not be left with nothing.
Consider how you can reduce costs in relation to the main positions.
1. Cost price
- With a sharp drop in revenue - you can optimize the order of products. Extrapolate the consumption of products for the previous similar period to the planned order.
- Strive to minimize write-offs of products and packaging materials, or at least fulfill the planned% of the budget.
- Continuously search and monitor suppliers to minimize the entry price of products. At least once a month - ask for prices from current suppliers and add 2-3 new ones to maintain the base in a competitive state and choose the optimal cost positions.
- Take into account seasonality.
- Control over the order and consumption of products, taking into account the seasonality of restaurant visits.
As an example, we can consider the best month for the restaurant business - December, because banquets are also added to regular attendance. And in January there is a sharp decline in activity: prolonged vacations, family gatherings and feasts at home, a saving mode after a big waste before the new year for visitors. An important task for managers is to carry out competent and timely restructuring by orders, optimize write-off of products and not allow the cost of dishes to grow more than 25-30%.
2. Staff costs
The cost of ordinary staff. By setting a performance goal, you can avoid overspending in this part. With any fluctuation in revenue, it is important to adhere to productivity.
Optimization of restaurant cleaning costs. You can draw up a staffing table depending on the attendance of the institution (hours, days of the week) and thus vary the cost of wages (relevant for fast-food establishments).
As real examples of cost reduction - the transfer of staff to hourly wages.
If your employees work for a salary, then with a decrease in the load on the restaurant and, consequently, revenue, wages are a constant in your budget. With hourly pay, at the time of reducing the load, you can let the employee go home and, thereby, reduce their costs.
There are special programs for staffing and monitoring. This helps reduce costs in the moment, and not at the end of the month, when it is too late to wave your fists.
3. Other variable costs
Do not synchronize equipment repairs with the expected outflow of visitors (seasonality in connection with the holiday period, planned events, for example, road repair at your place).
Acquiring.
Different banks give different conditions, therefore it is important to competently monitor possible promotional offers and keep abreast.
For example, an ad accidentally seen by me became an occasion for a client to contact the bank, where he managed to optimize his acquiring expenses from 2% to 0.9%.
Therefore, it is so important for managers or business owners to regularly cut the market.
Savings on utility bills.
Clear control and instructions for personnel on the consumption of water and electricity.
Optimization of material costs as a percentage of the revenue goal. If revenue falls, then you need to reduce costs for these suppliers, but within reason.
4. Rent
There is always the opportunity to discuss with the owner of the premises the possibility of transferring rent or discounts in the current period. No need to be shy. The primary task is to keep the business. If you don’t ask yourself, no one will offer.
There are many examples of savings on rent:
- rental holidays
- installment payment,
- deferment of payment,
- rate reduction
- breakdown of rental payments by fixed +% of revenue.
The owners of the premises are enthusiastic about such offers, however, they are ready to consider options, because the termination of the contract with the current tenant suffers great losses for them.
Carefully read the lease, perhaps this will also give you the result.
And, of course, restaurant owners always have marketing tools to attract more visitors. This can be both budgetary methods implemented on their own, and multi-million dollar contracts with the agency.
The more customers you have, the more revenue.
A permanent analysis of financial indicators will allow you to identify possible problems in a timely manner and not bring the situation to critical.
In a complicated restaurant business, money is very fond of counting.