To make money you have to spend money. It’s the dilemma that every restaurateur faces. Don’t worry – you don’t have to be daunted by the prospect of spending money. Think of it as an investment in your restaurant’s future. And if you do it wisely, you will give your business the greatest chance of success. So read on to find out some great tips on how you can cut costs for your restaurant. Cut down on food wastage

Did you know that the average restaurant wastes over 34,000 kgs of food a year? This could be spoiled or unused ingredients, uneaten portions or as a result of incorrect ordering. Fortunately, there are a couple of steps you can take to reduce food wastage.

  • Give your cooks a prep list: Monitor how many portions of each dish are ordered each day, and then instruct your chefs to prepare for that approximate number. Many chefs massively overprepare dish components, resulting in costly food wastage. All you need to do is provide them with a kitchen prep list, and make sure that they stick to it.
  • Use inventory software: If you over-order ingredients, wastage is inevitable. Its really easy to overorder if you calculate order quantities manually, based on what you think you will need. Using digital inventory software will tell you exactly how much of each item you have on hand, and it will automatically calculate how much stock you need to order each week to keep your inventory at an optimum level. This will also ensure that you do not under-order.
  • Repurpose ingredients: Stale bread, ugly strawberries and squashy tomatoes can all be repurposed – think bread-and-butter pudding, berry coulis and from-scratch tomato sauce.
  • FIFO: What is FIFO? It means first in, first out. You need to ensure that your cooks use your oldest ingredients first, so that they don’t go to waste. You can make sure that food with an upcoming expiration date is placed at the front of the fridge, while newer food is placed towards the back of the ridge. It sounds so easy, but it is really effective.

Your staff are so important!

The second step in cutting restaurant costs is to get your labor expenses under control.

  • Attrition: every lost employee costs a business on average $15,000. Staff stay in one job for 24-36 months, and in hospitality this figure is significantly lower. Fortunately, there are ways to keep your staff on board. Make sure that they are not overworked or bored. Make sure that they feel appreciated. Make sure that their achievements are recognized. Do not allow a toxic workplace culture to develop. There are so many steps you can take – for instance, doing weekly check-ins with your employees, implementing achievable rewards programs, and offer prizes such as gift-cards, early marks or freebies. Cash bonuses are always appreciated.
  • Serve more customers at once: There are so many ways that you can do this. You can have a waiter simply taking coffee or drink orders, so that more customers are enjoying their meal as quickly as possible. You can even go high-tech and implement digital menus and virtual ordering through tablets or iPads on the table. Pre-booking and table management software is also a great idea. If you use casual staff, it means that you can avoid over-staffing, as you can accurately predict how much traffic you will be getting on any given night.

Go digital!

As I mentioned earlier, using tablets instead of waiters and print menus to order will save your business so much money. In fact, 73% of restaurant-goers agree that restaurants that use technology appeal more to them. On that note, get rid of table-tents. Props and struts just clutter up your tables and get in the way of diners as they try to eat. This is where your tablets come in handy!

Food Cost Formula every item

You’re a restauranteur but that doesn’t mean you can’t be a savvy businessman or businesswoman as well. Take the time to run the food cost formula on each and every item on your menu. Here’s the magic formula:

Food cost % = Total ingredients cost / displayed menu price

For an item to be profitable, its food cost percentage should come up at approximately 15-30%. Any items that come up at over 30% don’t have to go, but they do need to be reconsidered. Either raise their menu price, source cheaper ingredients, or tweak the ingredients.  The percentage change can be calculated with various tools available on the internet.


There’s no benefit to burying your head in the sand. Map out a budget and put in EVERYTHING! Then tweak numbers where you think you can, allocate funds where you think they are most important, and rest easy knowing that you know your business inside and out.

Collaborative marketing

  • Marketing is so important for any business, and you don’t have to break the bank to make some effective marketing moves. Connect with other local businesses via Facebook, email, or even by phoning them up. Form partnerships with these businesses – for instance, launder you tablecloths at a discount and give the laundromat’s staff discounted meals. Share these business’s posts on our company’s social media pages in return for them doing the same for you.
  • Local media is your friend: Many local newspapers and radio stations would probably be more than happy to host an ‘ask the chef’ segment or feature your restaurant in a write-up. This is great publicity, and creates good-will within the community.


Its as simple as offering free meals to local social media influencers. A $50 meal can result in a social media post with a reach of thousands. Other social media influencers will charge a fee for every 1000 followers that they have. This may seem like a large sum up-front, but it works out to yield great ROI, or return on investment.

Save on the unavoidable costs

A restaurateur’s power bill can often be exorbitant. This is because dishwashers, ovens, stoves, fridges, freezers and all-night lights all consume a lot of energy.

But there are tricks you can utilize to minimize your power bill. Some appliances still use energy when in stand-by mode. Don’t confuse standby mode with being ‘off’. You can also check if your business is eligible for rebates and grants.

And what about insurance cost for the restaurant? You need to pay for business insurances like public liability insurance, glass insurance, content insurance, the costs add up. Using a comparison website might help you save on insurance cost.


Go with local suppliers

Customers are a huge fan of locally sourced produce. Its seen as healthier and more sustainable. It is also usually cheaper than non-locally sourced, off-season produce. Plus, a menu with rotating specials and seasonal dishes is more exclusive and keeps customers returning again and again.


Any way to save a buck, right? You can use automated programs like MailChimp to send newsletters, menu updates, event information and special offers to customers who have signed up on your website. Consider putting a chatbot on your website to answer customer queries.