With rising inflation and staffing costs, it’s becoming more and more important to keep an eye on every dollar your business spends. You need to carefully manage your spending and reduce restaurant overhead costs whenever you can.
If you think you’ve cut every cost you can, you may be surprised to have overlooked a few options. Let’s consider restaurant overhead costs and identify a few ways to reduce expenses and keep more money in your business.
Consider Your Restaurant Overhead Costs
To find ways to reduce restaurant overhead costs, start by considering all the different recurring expenses you have. Most restaurants have regular overhead costs in the following categories:
- Rent
- Utilities
- Advertising
- Equipment costs
- Services fees
- Salaries
- Hiring and training
Knowing your expenses is the first step to cutting expenses. Understanding your spending will help you create strategies to save.
Related: Find out How to Calculate Your Restaurant’s Prime Costs
7 Ways to Reduce Restaurant Overhead
Consider how you can use these tactics to reduce restaurant overhead costs and save more money.
#1) Cut credit card processing fees with a cash discount program.
Next to rent, credit card processing fees are often the highest expense for a restaurant. Roughly 3-8% of each sale can go to processing fees. You can cut these costs by offering a cash discount program.
A cash discount program avoids credit card processing fees by rewarding customers for paying in cash. When a customer pays, they have the option to remove a non-cash adjustment fee by paying with cash. It allows both restaurants and customers to save.
Related: Cash Discounting for Restaurants: A Guide to Getting Started
#2) Avoid food waste with better inventory management.
Throwing food in the trash is almost equivalent to throwing money in the garbage. Even so, food waste is a huge problem in the restaurant industry. A study found that the restaurant industry loses around $162 billion per year in food waste.
To reduce restaurant overhead costs related to food waste, implement a better restaurant inventory management system. When you have accurate inventory reporting, you can cut back on needless spending and avoid costly food waste.
Related: Restaurant Inventory Management Software: The Essential Guide
#3) Cut ingredient inventory by limiting your menu.
When you have a long menu with many different dishes, you will need to carry more inventory and ingredients. The extra items can be costly and increase the chances of spoilage and waste. To reduce restaurant overhead costs, limit your menu offerings so you can carry fewer ingredients.
- Review your ordering history, and cut menu items that are rarely ordered.
- Consider your recipe costs, and cut menu items that have low-profit margins.
- Choose menu items that differentiate your restaurant so customers have a reason to visit you.
Free eBook: How to Create a Successful Restaurant Menu
#4) Ensure recipe accuracy with a kitchen display system.
Food goes to waste when inventory expires. It also goes to waste when a dish is prepared the wrong way and sent back to the kitchen. To help your team make every dish with accuracy, install a kitchen display system.
A kitchen display system uses monitors to present orders to kitchen staff. It is both a quick way to send orders to the kitchen and a tool for ensuring ordering accuracy.
#5) Measure ingredients with BlueTooth scales.
When your kitchen staff incorrectly prepares orders, it can affect your restaurant overhead in another way. If chefs and cooks use the wrong amount of ingredients in a dish or provide incorrect serving sizes, it can throw off inventory, overuse ingredients, and increase the cost per dish. (Plus, it can lead to an inconsistent customer experience.)
Control portions and ensure ingredient-use accuracy by adding BlueTooth scales to your kitchen. BlueTooth scales can sync with your inventory systems to improve tracking accuracy while helping your kitchen staff use the right portions.
#6) Use self-ordering kiosks instead of at-the-counter ordering.
Staffing costs are a major expense for restaurants. Salaries and employment taxes are not the only staffing expense. Restaurants also need to spend on hiring and training costs. To avoid the need for such a large team, add self-ordering kiosks to fast-casual or quick-service restaurants.
Self-ordering kiosks reduce restaurant overhead by cutting employee costs. They can also provide an elevated experience for customers by giving them expedited service and more accurate orders.
Free eBook: How the Self-Ordering Restaurant Kiosk Is Changing the Way We Eat Out
#7) Offer online ordering directly through your business instead of third-party apps.
Demand for online ordering continues to rise. Customers like placing orders online for both delivery and pick-up. This demand is a great opportunity for you to serve your customers in a new way, but it can be expensive. Third-party delivery apps can take around 15-30% of each sale.
Avoid these costs by offering online ordering on your website. Instead of sending customers to apps, provide your own online ordering to directly receive orders and cut out costly third parties.
Related: 20 Cost-Saving Tricks for Your Restaurant
Want to Keep More Money In Your Restaurant?
Cutting costs and reducing restaurant overhead are more important now than ever before. You need to leverage every possible way to reduce expenses and avoid unnecessary spending.
This list offers ways to reduce overhead through cash discount programs, inventory management, kitchen display systems, BlueTooth scales, self-ordering kiosks, and online ordering.
You can get all of those tools with Lavu’s restaurant POS.
Lavu’s point-of-sale system is designed with restaurants in mind and offers more than 200 features that can be customized to help your restaurant improve operations and cut costs.
To see all of these tools in action, schedule a demo with our team. Or, if you want more information about how a POS can help reduce restaurant overhead costs, download our Beginner’s Guide to POS Systems.
