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.