Tag: reduce costs

5 Steps In 5 Months to 5 % Savings

Pre-pandemic, restaurants were doing well! Products were available, prices are stable, and employers had the power. Then an unexpected punch to the gut happened when the supply chain took a major hit due to shortages and price increases.

What if we said there were things you can do today in order to keep costs low and improve your margins? That means that in a world where everything was all about marketing, sales, butts-in-seats, new locations…. is now all about cost reduction, streamlining efficiency and driving margin.

The biggest and brightest minds in the industry are shifting their focus from top-line revenue to margins and profitability.

Here are 5 steps that you can begin taking today to reduce your prime and operating expenses by 5% in the next 5 months putting you on the right path to profitability:

Integrate Technology

technology

Are you calling your distributors every day to check on stock levels of your most pressing inventory? Many operators are finding out about substitutions only after the products have already been delivered to their restaurants. This does not work when you have been using the same ingredients since the day you opened your restaurant. By leveraging technology such as InsideTrack, you gain visibility into product sourcing and substitutions so you can prepare for menu changes ahead of time – instead of last minute.

What about carrying out core responsibilities in your restaurant such as auditing and price verification? That takes time and resources that not everyone has these days. Your in-house system of taking multiple spreadsheets and comparing them against each line item is no longer a very efficient way to audit. That manual process is too long and can lead to overlooked overcharges – which cost you money at the end of the day. By embracing technology in both your front and back of house, you can streamline operational tasks and reduce spend all at the same time.

Think About Outsourcing

outsourcing

Today, restaurant operators are having to do more with less and are being forced to outsource certain functions of their business such as Marketing, Legal, HR, Payroll, or Accounting.  So, why not outsource supply chain management and purchasing? This does not mean your current supply chain team is replaced. Instead, by partnering with supply chain experts you expand your resource pool and supplement your current staff. Most operators would love to add to their supply chain staff but the added cost to do so is too much, leaving them scrambling to manage the supply chain chaos on their own.

When you work with a supply chain management partner like Consolidated Concepts, Sundell and Associates, or even Restaurant Partners Procurement, you don’t have to pay for training, salary, insurance, and time off.  This is a popular option for many emerging and national chains, Private Equity firms, and even Publicly Traded restaurants.

Produce Management

produce management

Most operators don’t have the bandwidth, volume, or category expertise to efficiently manage their produce programs in-house. By leveraging a third party produce management company, you can reduce your produce spend by 5-10%.  On average, produce spend is about 15% of total food cost, so a 5-10% reduction in produce cost can lead to 100-200 basis points off your total food cost. Produce prices fluctuate throughout the course of a year due to things like seasonality and different growing regions. Yes, it’s true that you can occasionally buy better than the market but locking in contracted prices will protect you from volatility and you’ll ultimately be better off. Produce management companies such as Fresh Concepts or Produce Alliance will not only help you maintain, but improve your pricing, quality, food safety and traceability.

Operational Efficiency

operational efficiency

There are many changes you can make, both big and small, within your operation that can help you cut costs without making it so obvious to your customers. Take trash liners for example. If they are too big for your trash cans, you are wasting money on buying bigger bags without maximizing the full value out of each liner. By buying liners that are the correct fit, you can save on costs and extract the full value of each trash bag. What about your TV’s? Are all your TV’s running at the same time – even the ones where no customers are being seated? What a waste of power and electricity. Turn unused TV’s off and save on your electrical bill. Don’t forget about your kitchen burners. If you aren’t making food right away, they don’t have to be turned on as soon as your staff is clocking in. All that is doing is heating your restaurant up, forcing the AC to kick on – using unnecessary energy.

Making changes to your utility usage such as turning of lighting and electronics in unused sections of your restaurant, buying the correct size trash bags, using energy saving light bulbs are all small changes you can make cut costs.

GPO

gpo

GPO’s sometimes have a bad rap. They can cost an operator money and sometimes require you to switch products and change distributors. But not all GPO’s are the same. GPOs are widely used in the Healthcare and Hospitality space and the adoption rate for restaurants has dramatically increase over the past few years. Finding the right GPO partner for your restaurant brand can reduce costs and broadliner purchases by 50-150 basis points or more, depending on how contracted you are. Work with a GPO partner that is distributor and manufacturer neutral – one that will not require you to switch products or vendors and will honor your contracts. Work with a GPO partner that you can call on when you are looking for new product suggestions or reporting and analytics on existing purchases.

If you implement any of these suggestions, you will reduce cost and improve your margins.  It’s just a matter of how much. At Consolidated Concepts, we can help you tackle each of these steps, reach your business goals, reduce your costs, and streamline your operations. Become a member today for FREE and start making smarter business decisions.

4 Ways Restaurants Can Reduce Costs in 2021

2020 will be known as the year restaurants lost unfathomable amounts of revenue. Even worse, many were forced to close permanently.

It may be argued that restaurants that closed were running rather inefficient operations and were not focused on utilizing best practices on both the revenue and cost side in order to drive profitability.

One of the most important lessons that restaurants did learn this year is they need to use all the resources that are available to them to drive their own success.

Much attention has been paid in the media, on webinars, and among the public audience, to the creative ways in which restaurants are attracting new customers and meeting the shift in customer demands. That same creativity needs to be applied to the cost side of the profitability equation.

Here are some impactful ways that restaurants can reduce costs in 2021.

Sku Rationalization Can Reduce Costs

Deciding whether a product should be kept or discontinued can reduce inventory costs and cut down the complexities in procurement, production and distribution.

Spend time looking at your menu item performance and food cost metrics. Walk through each menu item and the ingredients they use. Ensuring that ingredients are being cross utilized is paramount in driving profitability at your restaurant and is helpful to the front line operation.

By focusing on sku rationalization, you can help ensure that your restaurant chain is maximizing on profitability while also avoiding potential risk of spoilage. Finding high quality and cost-efficient solutions to replace ingredients you aren’t using or selling as much can minimize SKUs while maximizing taste and profit.

Assess Utilities and Fixed Costs

Every penny counts these days. Often, operators don’t realize how much utilities costs can play a huge factor in monthly operational costs. Try switching the type of light bulbs you are using, upgrading your HVAC system or adding window tint.

By making changes and improvements such as these to your operation, you can reduce recurring expenses, save money and increase your bottom line.

Monitoring Inventory and Costs of Goods Sold

Using technology to track your inventory and recipe costing can show an operation their true costs of goods sold. If you are taking inventory once a month or even once a quarter, you could be losing money and not even know it. By conducting stock management checks on a daily or weekly basis, you can keep up to date on the latest price changes and what’s selling and not selling (which can also assist you with your sku rationalization!).

Keeping track of your inventory can also help with maximizing promotions and menu innovation using the products that sell the most – and even products that are set to expire soon so you don’t waste them.

Partner with a GPO to Reduce Costs

Group Purchasing Organizations (GPO’s) can leverage the buying power and purchasing data from all their operators to offer the best pricing on contracts, data services, and expertise across all foodservice segments. Partnering with a GPO brings instant savings to your operation in areas like produce management, staff uniforms, sanitation and inventory costs.

All these are just a few ways in which restaurants can see significant savings to their operation and maximize the margins that they earn from the revenue they bring in. By choosing a GPO like Consolidated Concepts you get access to a fully customizable service that brings you instant savings on thousands of items. Contact us to learn how we can bring you buying power, category specialists and broadline/negotiation expertise to your multi-unit operation. Utilize our contracts, partners, experts and technology to reduce costs, improve quality, streamline the supply chain and gain valuable business insights.