Hack Your Expenses! 13 Ways to Cut Restaurant Costs ASAP

It’s tough out there for restaurant owners! Labor and food costs are on the rise, and competition for customers is fierce. The next time you’re feeling the squeeze on your bottom line, just try these 13 penny-pinching moves. From a “secret” employment tax credit to tactics for trimming food waste, get ready to cut restaurant costs…right now.

Tackle Food Waste: The Top Way to Cut Restaurant Costs

If you’re like most restaurants, you throw away between 25,000 and 75,000 pounds of food each year. That’s a lot of money going down the  drain – and into the garbage. Here’s how to cut restaurant costs related to food waste:

1) Rethink Waste: Are those overripe tomatoes really unusable? Or, could you turn them into a gazpacho  soup or house-made bloody Mary? Stale bread gets a second life as croutons, bread pudding, or a soup thickener.

2) Portion Control: Do some detective work to cut restaurant costs. Spend an hour in the kitchen tonight during the dinner rush. Are  plates coming in still loaded with food? Your portions are too big! Cut restaurant costs by reducing portions, and then keep them consistent. Instead of eyeballing portions, staff should use portion control scales.  

3) FIFO for the Win: Expired or spoiled ingredients often make up the bulk of a restaurant’s food waste. That’s where FIFO comes in – and it’s one of the easiest methods to cut restaurant costs. FIFO stands for “first in, first out.” That means the oldest  ingredients should be kept in the front of  storage areas so they’re used first. When new inventory arrives, clearly label it with an expiration date to simplify the FIFO process.

Look for Labor Savings

Here’s another staggering statistic…the average annual cost of restaurant employee turnover is $146,600.To cut restaurant costs, get staff smart using these strategies:

4) Get Turnover Under Control: The restaurant biz is notorious for a high turnover rate of 70%, according to a 2017 report by the National Restaurant Association. So, what can you do to keep your star employees happy? Try implementing some of these 13 creative ways to reward restaurant staff (and cut restaurant costs along the way). Simple ways to show your team some love include “employee of the month” programs and small gift cards for meeting goals.

5) The “Secret” WOTC Tax Credit: In 2015, the U.S. government launched the Work Opportunity Tax Credit (WOTC) to incentivize businesses to hire certain individuals like U.S. veterans, residents in lower income areas, and even SNAP recipients. The WOTC program is an awesome way to cut restaurant costs related to labor – and help out folks in your community. Bonus: If you’ve hired employees that fall into the WOTC guidelines, you may even qualify for a retroactive tax credit. Talk with your accountant ASAP!

Give Yourself a Marketing Makeover

Maybe your social media campaign is getting tons of “likes” but it’s not moving the needle on your bottom line. Or, you offer online coupons but no one is redeeming them. To cut restaurant costs – and boost marketing ROI – consider swapping in these low- and no-cost tactics:

6) Find an Influencer: Influencer marketing is a smart way to cut restaurant costs on social media. Essentially, you pay a person or another business with a big social media following to talk up your restaurant. Look for influencers with followers who are similar to the customer you’d like to reach. Do you run a sports bar? See if there is a local sports blogger who could write a blog about your bar. To find the influencers near you, use www.BuzzSumo.com. Influencers often charge between $25-$75 per thousand followers for a mention.

7) Get Eventful: Live events give guests a reason to come in, making them one of the most powerful marketing strategies. But why pay a cover band big bucks, when you could host a live event yourself? If you’re serious about ways to cut restaurant costs, try these events (they’re more fun than a live band anyways!):

Live trivia night is trending nationwide, but trivia hosts can be very expensive. It’s time to cut restaurant costs again! Join thousands of restaurants and bars that run trivia night themselves using a digital trivia platform like Buzztime. Buzztime gives you everything you need to run live trivia : up-to-date questions, all the answers, tablets for automated scoring, plus training and marketing support.

On top of running trivia night, your staff can host other live events. What about a weekly Mixology 101 course led by your best bartender or a cooking class workshop with your chef?

Another popular way to cut restaurant costs but still offer up awesome entertainment is with a Plant or Paint Nite workshop. Guests pay the workshop host directly, who then provides supplies and step-by-step instructions for potting a terrarium or painting a masterpiece. There’s no cost to you.

8) Think Cooperatively: Want to cut restaurant costs involving marketing even further? Take a collaborative approach. Make a list of 10 local businesses that cater to the same audience as you. If you run a trendy bistro, maybe there’s a nearby clothing shop or yoga studio? Reach out to these businesses and ask if you can set out menus or flyers in their business. In exchange, you’ll do the same for them! You could also promote each other on Facebook.

Smarten Up Your Sourcing  

Hopefully, you’ve already talked to your food and liquor distributors, asking for their help as you cut restaurant costs! For example, ask your liquor distributor if they know of any wine or spirits brands offering promotional pricing. Some brands will also send in a rep to run a tasting or event (for free). To cut restaurant costs, it’s also a good idea to diversify your sources. There’s no need to ditch your primary distributor, but you may be able to get better prices using these tips…

9) Focus on Local Farms

The farm-to-table trend is only getting more popular with customers. And that’s good news if you’re trying to cut restaurant costs. Local, in-season produce is often cheaper than what your distributor can provide. Why? Because you’re not paying to have it shipped in from across the country. Use these 11 best resources for sourcing local food.

As you seek out ways to cut restaurant costs, look to your own backyard…or rooftop. “Hyper” local sourcing is also a major trend cropping up at restaurants. From rooftops filled with potted herbs above NYC eateries to vegetable gardens behind suburban pubs, savvy restaurateurs are reducing costs by growing ingredients themselves. Plus, if you grow it yourself, you can justify a higher markup on the menu…after all, it’s homegrown and harvested by hand!

Get Energy Efficient

Going green is still a buzzworthy concept for customers – and it’s also an excellent way to cut restaurant costs. Here’s how to do it!

11) Beware of Vampires: These are energy-sucking appliances that can ruin your efforts to cut restaurants costs. You may have turned a machine or appliance off, but it’s still guzzling energy on standby. To cut restaurant costs, cut off the power supply when the appliance is not in use. Common vampires include TVs,  ranges and ovens, POS devices, and audio equipment.

12) Become an Energy Star: Federal, state, and local government are all on a mission to help you reduce energy consumption (which will cut restaurant costs). You may qualify for some pretty big grants, rebates, and tax incentives just for upgrading to an Energy Star or energy-efficient appliance.

13) Lighten Up: Still using those incandescent bulbs? They may be cheap but only last for 1,000 to 2,000 hours. Compare that to 60-watt LED bulbs which last up to 25,000 hours – and don’t cost much more. As you look to cut restaurant costs, you could also try CFLs (compact fluorescent lights) which last for 5,000 hours and use a quarter of the power of incandescent bulbs.

Now that you have 13 ways to cut restaurant costs, the next step is putting a plan in place. It’s alright to start small. In fact, little cost-cutting measures can add up to a major boost in your bottom line!