9 Simple Strategies to Control Restaurant Food Labor and Overhead Costs

Summary

In this video, Dave Scott Peters, a restaurant expert and coach, shares strategies to help restaurant owners control costs and maintain profitability. Key areas covered include managing food costs through portion control, supplier negotiations, and menu engineering; controlling labor expenses through effective scheduling, cross-training staff, and incentive programs; and minimizing overhead costs with energy-efficient practices, regular maintenance, and optimized inventory management. Dave emphasizes the importance of tracking expenses and continuously improving cost-saving strategies to keep the restaurant thriving without compromising quality.

Takeaways

• 😀 Understand where your money is going: food, labor, and overhead are your main costs. Knowing their percentages helps with adjustments.
• 😀 Portion control: Standardizing portion sizes reduces waste and keeps food costs in check.
• 😀 Negotiate with suppliers: By signing a prime vendor agreement, you can lower food costs by 3-7%.
• 😀 Menu engineering: Use recipe cost cards and analyze your menu to make adjustments that can reduce food costs.
• 😀 Effective scheduling: Use historical data to predict busy times and schedule staff accordingly, minimizing labor costs.
• 😀 Cross-training staff: Train employees to handle multiple roles, reducing the need for a large staff and increasing flexibility.
• 😀 Implement an incentive program: Offering bonuses for performance helps motivate managers and staff to meet key performance indicators (KPIs).
• 😀 Focus on energy efficiency: Investing in energy-efficient equipment and practices can lower utility bills and save money.
• 😀 Regular maintenance: Preventive maintenance on equipment reduces the risk of costly repairs and unexpected downtime.
• 😀 Optimize inventory: Avoid overstocking to reduce waste and keep capital free for other investments.
• 😀 Constantly review your expenses: Regularly assess your costs and make cuts without sacrificing quality or your core values.

Q & A

What are the main costs that restaurants need to control to maintain profitability?

The main costs in a restaurant are typically food, labor, and overhead. Understanding the percentage of revenue each of these takes up helps identify areas where adjustments can be made to maintain profitability.

How can restaurants control food costs effectively?

Restaurants can control food costs by using standardized portion sizes, negotiating with suppliers for better prices (such as through prime vendor agreements), and performing menu engineering to analyze and adjust their menu mix to optimize food costs.

What is a prime vendor agreement and how does it help reduce food costs?

A prime vendor agreement is when a restaurant agrees to purchase 90% of its food from a single vendor. This helps streamline operations, negotiate better prices, and reduce food costs by up to 3-7%.

What is menu engineering and why is it important?

Menu engineering involves analyzing the cost and popularity of menu items to adjust offerings. By optimizing the menu mix, restaurants can reduce food costs and improve profitability.

How can restaurants manage labor costs effectively?

Restaurants can manage labor costs by using effective scheduling based on historical data, cross-training staff to handle multiple roles, and implementing incentive programs that motivate staff to meet key performance indicators (KPIs).

What is the benefit of cross-training staff in a restaurant?

Cross-training staff allows them to perform multiple roles, reducing the need for a large staff and offering flexibility to adjust labor levels based on demand, thus reducing labor costs.

How can incentive programs help manage labor costs?

Incentive programs motivate employees to perform well by offering bonuses for meeting performance goals. This can lead to higher productivity and more efficient labor usage, helping to control costs.

What strategies can be used to control overhead costs in a restaurant?

Strategies to control overhead include investing in energy-efficient equipment and practices to reduce utility bills, scheduling regular preventative maintenance to avoid costly repairs, and optimizing inventory to prevent overstocking and waste.

Why is energy efficiency important for a restaurant's bottom line?

Energy efficiency helps restaurants save money on utility bills. By investing in energy-efficient equipment and practices, restaurants can significantly reduce their operating costs.

How can inventory optimization help reduce costs in a restaurant?

Optimizing inventory ensures that restaurants do not overstock, which ties up capital and leads to waste. Keeping inventory lean and accurate helps reduce costs and improves cash flow.