50 Ways to Cut Costs Without Reducing Quality or Harming Your Guest Experience

We often talk about the astounding number of ways there are to lose money in the restaurant business, whether it's in the kitchen, dining room, bar, storage areas or back office. This being the case, it stands to reason that there are also lots of things that operators can do to stem potential losses by modifying how they do business in these areas.

Here are 50 proven practices that restaurants large and small have found to be effective in reducing waste, minimizing losses and improving efficiency and overall profitability.

Use these 50 items as a checklist to spot potential problems and opportunities to improve. While some items may not have the potential to generate significant savings, what's important is the potential cumulative effect that successful implementation of even just a few of these practices could mean to the overall profitability of your restaurant.

Lower inventory levels. Obviously, there's a limit to how much you can lower inventory levels, but it's common for many restaurants to have more food on their shelves than they really need. Evaluate your inventory levels product by product and base your reorder levels on how much you think you'll actually use until the next delivery comes in and add in a small but reasonable safety factor. By reducing excess inventory you'll have less waste and spoilage and you'll likely see your staff do a better job of portioning and handling your expensive products when there is less of it on hand.

Daily inventory on key items. This is one of the most basic, yet effective cost controls in the restaurant business and we're constantly amazed at how many independent operators don't do it. This practice begins with identifying your top 10-15 products that make up the bulk of your food cost. Each day, count and record the beginning or opening quantity on hand for each product. Add to that any purchases during the day. At the end of the closing shift, count the ending inventory and compute the usage for each item by adding the beginning quantity and the purchases, then subtract the ending amount on hand. The result is the amount of each product that was used. Now, compare that figure with the POS (point-of-sale) product usage report for each product. If actual usage is greater that the POS (theoretical) usage, investigate immediately. Could be a sign of theft, overportioning or other food-use problem.

Get rid of trash cans in kitchen. Any restaurant is at risk for losing good, usable food products to their kitchen trash cans. If there's a training gap or people are careless when slicing, dicing or prepping anything in your kitchen, good, usable (and expensive) products can end up in the trash. We know of operators who occasionally remove all the trash cans out of their kitchens and replace them with clear plastic food boxes. Each employee receives a clear plastic food box with their name on it. They are then instructed to place all of their scraps, trimmings and waste into their own food box. At the end of each shift, a manager briefly inspects the contents of each employee's food box. If good, usable product is discovered, it's immediately brought to the employee's attention and, if necessary, they receive some on-the-spot training. As they say, "don't expect what you don't inspect." Ditching your kitchen garbage cans for plastic food boxes, even for a just week or two, will give you the perfect opportunity to find out exactly what's leaving your kitchen and ending up in the dumpster.

Check garbage cans in the dish room too. Trash cans are potential profit holes in the dish room too. Smart operators occasionally inspect the contents of dish room trash cans and often find expensive china, glass, silverware and other tableware.

Place a video camera in your dumpster area. Dishonest employees will oftentimes steal individual steaks, bottles of liquor or other expensive items by concealing them in purses, backpacks and coats. However, for an employee to steal an entire case of product, the favored method of operation is to throw it in the trash and come back to retrieve it later. Key item inventory counts help to isolate missing product to a particular shift or day, but knowing how the product was stolen is often elusive. Having a video camera pointed toward your back door and dumpster area allows you to play back the suspicious periods of occurrence.

Never allow employees to take trash to the dumpster without manager approval. As described in the previous tip, the easiest method for stealing is to discard the stolen product with the garbage. For this reason, any access in and out of the kitchen door should be controlled. Many restaurants keep the kitchen door locked by installing a panic bar that sounds an alarm if used to exit the building. Any exit is controlled by the kitchen manager or designated supervisor. Specific times are set for removing trash, giving managers the opportunity to visually inspect what is being discarded.

Consolidate purchases with a prime vendor arrangement. We've noticed that the practice of buying a large portion of products from one broadline supplier is much more common in more highly profitable restaurants than it is in marginally successful ones. While one-stop shopping, as it's sometimes referred to, is no panacea, in most cases consolidating the majority of purchases with one supplier tends to offer the opportunity to lower overall food prices and costs. Prime vendor relationships can be structured in many ways but most operate on a cost-plus basis. Suppliers agree to a certain percentage or dollar amount of "markup" over their cost for a certain amount of time, often a year. While some operators say they have not found a prime vendor relationship particularly advantageous, many successful independents have and some even claim their close relationship with their prime supplier is one of the main reasons for their success.

Audit first and last 15-30 minutes of every shift. There's a saying that "Work expands so as to fill the time available for its completion." (C. Northcote Parkinson, Parkinson's Law). This means that when employees are given less time for a task they will work faster and get more work done than they are presently doing. In restaurants, you can often tell if employees have too much time by noticing their pace and sense of urgency during the first and last 15-30 minutes of each shift. A casual or slow pace especially during these times may indicate that they could get the same amount of work done on their shift with fewer hours on your clock.

Stop doing a repetitive schedule. Prepare the weekly labor schedule based on anticipated sales and customer counts. As business slows or ramps up, adjust employee hours accordingly.