10 Golden Rules for Restaurant Cost Control


The moment we hear the term “restaurant,” our mouths start to water. Even though the restaurant’s big appeal is its cuisine, other important aspects like atmosphere, service, and price also serve to entice new customers or foodies.

While having all the amenities and serving delicious cuisine can increase business, turning a healthy profit is not always easy. Actually, it is by far one of the highest-risk business models available, and the overwhelming majority of would-be restaurateurs end up incurring significant financial losses.

Therefore, it would be helpful if you managed your spending to get the most out of it.  With that in mind, we have come to you with 10 golden rules for restaurant cost control.

So without any further ado, let us check it out.

Inventory management

The first step in attempting to manage costs is monitoring and controlling the inventory. To keep track of your daily stock-ins and stock-outs and track the costs, you must be proactive. 

To stop all additional stock waste, the difference between the current inventory and the optimal inventory shouldn’t be greater than 3-5%. Reorder just the necessities to reduce the chance of waste and overordering.

To take the hassle out of your hand, you can use a solution like WatermelonThis enables you to control all your supply procurement and manage every aspect of your supply order and inventory from one dashboard.

So in short,

  • Utilize the inventory management solution to forecast your stock requirement.
  • Keep the variance between your current and optimal inventory within 5% maximum.
  • Keep track of food supplies that are being used daily.

Utilize credits for the purchase

By opting for fewer money transfers and making all of your expenditures using the restaurant’s accounts on a credit term, you can keep your restaurant spending under control. The raw resources you buy in cash are typically less abundant and more expensive than when you acquire them in larger quantities.

You can also get the best deal by comparing all the best prices in the watermelon marketplace to cut down on the cost.

Managing your yield

By paying close attention to a little but crucial factor that is frequently ignored, notably yield management, you may execute restaurant cost control & considerably lower your cost of food.

In order to limit food costs, yield management is crucial since it helps you estimate how many raw materials will be required to create a specific food item. The yield of the finished goods should be considered while ordering and purchasing the raw materials.

Another big aspect of managing the yield is table management. Get data on whether your restaurants attract more singles, couples, or larger groups and optimize your table accordingly.

Waste management

Almost 10 percent of food products are wasted before they reach the customers. Diners also leave 17 percent of their meals uneaten due to the lack of portion size planning.

Food waste results from eating and offering oversized servings that are unneeded and result from excessive production. The meal looks good and costs less when it is plated properly and in sufficient, appropriate servings.

 Keep a watch on the elements that are deemed waste, such as burned food, rejected food, spilled food, and portions that are thrown away. Having a professional chef in the kitchen can aid in lowering them significantly.

  • Avoid overbuying stock.
  • Store food correctly.
  • Maintain the First in, First out rule with ingredients.
  • Change your menu to adjust to the leftovers.
  • Recycle as much as possible.

Control the labor cost

The main goal of every restaurant should be to keep their labor cost below 30% at all times. That means for every 100 dollars a restaurant earn, the cost of employees should be below 30 dollars.

A significant amount of money is required when hiring restaurant employees, beginning with the recruitment process and continuing with proper training. However, if any employee resigns from your business after just a few weeks, all the money you spend on hiring the worker is lost.

Therefore, when employing new staff for your restaurants, your main priorities should be quality hiring and creating a welcoming environment to encourage them to stay for a longer period of time. Take your time while hiring and thoroughly evaluate the profile of the applicants.

Additionally, make sure your dining crew has a fair wage structure and receives recognition and awards so that they will want to stay on as employees.

Here are some notes you can follow to control the labor cost.

  • Control employee attrition rate.
  • Work on an appropriate salary structure.
  • Cross train the team.
  • Get employ part-time help.
  • Invest in automation for requitement.

Automate as much as you can

Accounting and order placement has always been seen as labor-intensive tasks. Manually performing it opens the door for human error and takes time. The amount of human resources needed to carry out these duties is decreased by a supply management system that streamlines the whole ordering and billing process, through fast invoicing.

A system that includes a table management system will also significantly minimize your reliance on manual labor, which will lower your labor costs.

Here is a list of things you can automate in a restaurant.

  • Digitalized menus
  • Self-ordering kiosks
  • Inventory and order management using a software solution like Watermelon.
  • Table reservation.

Staff performance evaluation

It’s crucial to track and evaluate the performance of your kitchen personnel to determine where they excel and where they have room for improvement. Establish the KPIs for your restaurant workers and closely monitor them to determine whether they are performing their tasks in accordance with expectations.

A restaurant management solution with a staffing feature would make it easier to keep track of your crew’s performance and give you the information you need to improve their training and efficiency. Your revenue will consequently increase, and the expenses will be justifiable.

Here are some tips that will help you with the whole evaluation process.

  • Provide clear and concise remarks.
  • Keep the evaluation meeting a two-way conversation.
  • Hold multiple evaluations in a year.

If you feel as if the employee is not feeling comfortable opening up, you can ask them questions like,

  • Which one of your accomplishments during the review period gives you the most satisfaction?
  • Which area do you believe has shown the biggest improvement since your last assessment?
  • Which areas, in your opinion, require the most improvement?
  • How may I help you achieve your objectives?

Regular reporting

Another crucial bit of wisdom is to regularly monitor your entire restaurant operation. In this situation, real-time reporting is highly helpful. You may maintain tight oversight over your company, find an area of income leakage, or keep an eye on sales-purchase records by keeping a record of the figures and submitting regular reports.

Depending on the scale of your restaurant, the purchases-sales record should be reviewed every week or every two weeks.

Additionally, you must keep an eye on the monthly sales report, which provides information on how well each menu item is performing in terms of sales. In order to decrease waste, you should ideally periodically remove the menu items with poor sales and high food costs.

Tracking KPI

There is no way to figure out whether you are doing better when it comes to your business’s finances without tracking KPI. Here are the typical KPIs that will provide you with the highest insights.

  • Net profit.
  • Gross profit margin.
  • Sales history.
  • Time per table turn,.
  • Number of guests served per hour
  • Overhead margin.
  • Average check per table.

Supply order management

Due to real-time visibility into all of your purchase reports and a powerful supply order management system, you can create more efficient procurement strategies and make more informed purchasing decisions. You may reduce overpaying and supply waste by viewing your order trends and all the information on a straightforward dashboard.

Watermelon is one of the leading supply order management systems that is completely free to use and enables you to control your restaurant cost like never before.

This will enable you to have better control over restaurant costs by,

  • Allowing you to Manage and track your orders
  • Offering insights into your finances and inventory
  • Ordering directly from your suppliers or connect with new ones.
  • Save time and money from the tedious paperwork.

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