What is Cutting into Your Restaurant Profit?

One of the biggest misconceptions that many restaurant owners have is that delicious food and a nice setting will be enough to allow their business to flourish. Although those two ingredients are crucial, if you don’t take control of expenses, or figure out what is cutting into your profits, you could end up bankrupt in no time. Don’t get stuck with a failed restaurant. Instead, check out these common factors that could be cutting into your restaurant profit, and make sure you have them under control.


Labor Costs

If your employees are taking advantage of their clock-in and clock-out times – leaving early without permission, or slacking off on the job – this can cut deep into your business profits. Make sure you have a trustworthy manager who checks on your employees and will ensure that everyone is doing their job to the best of their ability.


Food Waste

Another way to obtain maximum profits is to reduce food waste as much as possible. You can start by checking to see if there’s food being thrown out after each meal. If so, you need to get a handle on portion control and change the inventory amounts you are ordering to reduce unnecessary waste. You should also figure out how to get the most out of each ingredient, such as using leftover bones as stock, and leftover vegetables for a chili. Get creative with your menu to reduce food waste and expense.


Food Costs

Overpaying for food cuts into restaurant profits. There are lots of creative measures you can take to cut down on food costs. For example, consider purchasing “ugly vegetables,” which are offered for much less since they may not look as perfect as others. Find a way to reduce spoilage, like storing food in Tupperware containers as opposed to bags. Look for ways to lower your food costs without detracting from quality.


Security Concerns

One sure way to have your profits slashed is through supply theft. This can be easily addressed by installing security cameras in the shipment, kitchen, and stock areas. If you can’t afford an extensive system, there are fake security systems that easily do the trick for deterring thieves.


Employee Turnover

It takes time and money training new staff and can also negatively affect the morale of the team. So, take the time to figure out a way to improve your employee retention rates. If that means offering staff incentives or raises to keep your employees happy and productive, it can be worth the money savings in the long run.


Vendor Pricing

Don’t just sign with the first supplier you meet. Make sure you talk to other suppliers to search around for the best rates. Plus, you should avoid signing exclusive agreements since this strategy can work in your favour if you can find one supplier for quality meat and another better supplier for produce, for example.

To keep a restaurant functioning at a successful rate, you need to find out what is cutting into your revenue and affecting your overall profits. To keep your doors open, make sure you effectively manage your expenses and keep them on track.

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