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5 Effective Ways to Cut Down Restaurant Costs

Your smart guide to spend less and earn more.

There is no doubt that many restaurant expenses like inventory management, technical costs, property rent, food ingredients, set-up cost, employee salary, etc. take up most of your profit margin and leave your restaurant business with a handful of profit. 

Additionally, the cost of sanitizing and disinfecting, in the wake of the current COVID-19 pandemic, adds up to the restaurant’s expenses. According to the Economic Times, restaurants may lose 40-50% of their total revenue due to the lockdown and preventive measures taken by people. So, it becomes necessary to cut down your cost by an equal amount to keep your business thriving. 

This article will talk about the five best possible ways to cut down restaurant’s costs and improve the restaurant’s efficiency.

So, let’s get into it!

Cut Back On Marketing Expenses

Cutting back on your marketing sounds like a difficult step as it may reduce your customer base due to less marketing. However, have you ever wondered that marketing could be inexpensive, too, along with increased inefficiency?

There are many ways you can cut back on your marketing costs too and improve the restaurant’s efficiency by:

  • Social Media Promotion

Social media is the easiest and most effective way for free marketing. You just have to create a social media account on Facebook, Instagram, Pinterest, etc., promote your dishes, and flaunt your restaurant’s ambience to attract customers. 

Let’s take a look at some of the international restaurants with excellent social media marketing.

  1. Nando’s 

Nando’s has some of the best social media tactics. Along with informative posts, they have also started an initiative known as ‘Booth Truths’ to engage their customers in more heart-to-heart conversations. 

  1. Chipotle

Chipotle regained its reputation amongst all the other restaurants through an app, ‘Tiktok’. They invested a lot in this technology by being extremely creative, to reach the pinnacle of success. 

  • In-House Online Ordering Service

Food ordering apps may help you in gaining recognition, but most of them take up a 30-40% commission on every dish. These apps could take away most of your profits and leave you with a handful of them. 

Contrarily, having an in-house online ordering service can help you to increase your branding, along with having a commission-free service. You can also read all the benefits of an in-house ordering service here. 

  • Offering special discounts to regular customers

You can also offer various types of special discounts for all your regular customers and have loyalty programs. This can help in retaining your old customers and will save all the extra marketing costs. 

There are many other reasonable and cost-effective marketing techniques you can choose as per your requirements. 

Save The Cost of Printing and Go Digital

The best thing about technology is that it’s totally free if you know how to find excellent resources.

The cost of printing is a lot more than digital printing. The overall expense of printing menu cards, reprinting them due to any significant changes and changing them continuously, can cost a lot. Additionally, the cost of printing special menus for the tabletops also adds up to the expense.

Now, due to COVID-19, continuing with reusable menu cards is just not feasible. The best alternative to this problem is to go digital. You can get your own QR Code based contactless menu card.

The customers just have to scan your restaurant’s QR-code, and they can get the entire menu right in their phones without any complications. You can also email digital pamphlets to your customers instead of using printed ones. 

Use Local and Farm-fresh Ingredients 

You can cut down your food cost by choosing local and farm-fresh vegetables instead of expensive and exotic ones. It’s okay to use unique ingredients for sumptuous dishes but for the regular ones, farm-fresh veggies are the best option.

You can offer desserts and dishes based on seasonal fruits and vegetables and obtain profits by spending less on groceries.

Many restaurants in India, like Fresh Roast, in Ahmedabad, have moved to healthier and farm-fresh alternatives to reduce cost and also provide healthy food. Chef Manu Chandra’s Toast & Tonic is a forward-thinking restaurant with a fiercely seasonal menu.

However, make sure you do not reduce the quality of your food items and dishes as it can affect the taste of your meals. In the end, it is your dishes and culinary skills that attract the customers to you.

Balance Salary Expenses and Restaurant Profits

Cutting down your staff will only create more inefficiency and chaos during the busy days. Due to this, your restaurant’s management and reputation may go down. So, to avoid this, the first step is to find the best employees who have the dedication to work for you. 

Once you’ve hired, it is time to encourage your employees to work more efficiently. You can give them bonuses on some of the important targets. You can also pick an ‘employee of the month’ as done by major chains like Domino’s Pizza and McDonald’s. 

Such encouraging ideas can help them to work wholeheartedly and yield results along with cutting the extra costs of hiring ineffective employees. 

Set a Budget and Meet Your Goals!

For any business, be it restaurant or retail, setting up a budget is an essential step towards cost-effectiveness and to improve the restaurant’s efficiency. 

Setting a budget can help you answer the following questions:

  • How much money to spend on ingredients?
  • How much money to spend on marketing?
  • What should be the approximate cost of the restaurant’s management like rent, light bill, gas bill, etc.?
  • How much money goes into the salary of the employees?
  • What’s my target profit margin for this month?
  • Are there any special public holidays?
  • How can I increase my customer base cost-effectively?
  • How much money goes into incentives, bonuses, and offering discounts to customers?

These questions can help you find answers to a cost-effective approach for running your restaurant. A budget can also help you move forward in a uniform and strategic way to avoid any kind of chaos and inconvenience. 

In the end, if you follow the budget correctly, you will have the power to hit all your targets timely.

Conclusion

These strategies have been known to work for many restaurateurs. It may take some time to establish a cost-effective system but with patience comes fruitful results. So, keep going and keep in mind your budget, goals, and targets to reach the pinnacle of success!

Author avatar
Dhara Maniar

1 comment

  1. […] industry was booming before this pandemic. Now, restaurant owners are trying their best to be cost-effective to survive in the […]

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