RestaurantsCutting Costs & Increasing Profit: Restaurant Edition

Cutting Costs & Increasing Profit: Restaurant Edition

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David Larsen
I’m a husband, dad, food blogger, photographer, writer, social media boss, entrepreneur.

All businesses are affected by external factors to some degree, but the hospitality industry is perhaps affected more than most. The hospitality industry is often as fickle as the consumers that it serves.

With so much out of your control, you need to embrace the factors that you do have control over. For the most part, this will be your business’s expenses; in looking for ways to cut costs, you can increase your profit margin. Keep reading to learn more.


The cost of supplies, which in a restaurant’s case is predominantly food, is arguably going to be one of the highest ongoing costs for your business.

Therefore, any issues with the inventory, like mistakes, waste, misuse or even theft, can all take a toll on your business’s bottom line.

This is why you should start by thinking about ways in which you can safeguard your inventory a little more.

This could mean working with suppliers or shopping around to find the best ingredients at the lowest possible price. It would also make sense to have the in-house team undergo training in an effort to reduce wastage wherever possible.

Overheads & Other Costs

After the supplies, there are, of course, a number of other costs to consider. The rent and utilities are likely to be non-negotiable, although swapping energy providers could help to bring your costs down somewhat.

After managing supplies, it’s essential to address additional financial aspects. Alongside choosing the best bank account for savings. A strong banking foundation will improve your restaurant’s financial stability and expansion. 

The cost of wages will also need to be taken into account, although well-trained staff are an asset to your business and should be treated as such. Finally, another unavoidable expense is business insurance.

You obviously will need insurance coverage for restaurants, like the policies provided by The Hartford, as opposed to any other form of business insurance because it is tailored to your industry.

Appealing to Consumers

In order to increase your profits, you also need to think about how you can bring in more business. This means finding ways to appeal to your consumers. This might mean taking things back to basics and working out who precisely your customer base is.

Are you more of a family restaurant, or a trendy young eatery, or an industry-leading fusion restaurant? The purpose of your restaurant is likely to help you to define your consumer base. You can then begin to better tailor your restaurant to them.

Your front-of-house processes are also likely to affect your profit margin because first impressions do matter. Your front-of-house staff needs to be trained in how they should behave towards customers. How can they help to bring more consumers in and ensure repeat business? Think about how the host should welcome customers in and make sure that they know their obligations regarding this. A positive experience can help to guarantee repeat business as well as good reviews, which in turn can bring in new business.

In Conclusion

Turning a profit in any business can take time. Patience is key; that being said, looking for ways to cut costs can help to keep your business ticking along until you find your stride as a restaurant. For the most part, the tactics mentioned above are simply examples of good business sense. They can help you form the basics when it comes to developing a business plan geared towards long-term profitability.

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