Most managers get into the restaurant business because they’re passionate about hospitality. They want to serve people delicious food and create a welcoming, come-again atmosphere.
Gone are the expectations that being in the industry means tiny margins and minimal profits.
But the modern restaurant industry is calling for a change. Competition is on the rise… scores of new restaurants open their doors every day, sporting new dishes and new concepts that up the ante for their neighboring eateries. Food prices are going up, too. The National Restaurant Association reports a 25 percent increase in food costs over the last five years alone.
Unexplainably, though, low profits and lower margins are widely accepted by managers in the industry as “the way it’s always been.” But it doesn’t have to be this way. Although it’s important to focus on the quality of the food and the guest experience, today’s restaurant managers must embrace a business-before-hospitality mindset.
By changing their priorities and daily habits, managers can focus on the business side of their restaurants: making money, saving money, and re-investing money. To this end, we’ve identified three of the practices many managers aren’t implementing that are costing them big, as well as how to address these issues right away.
#1 Not Keeping a Finger on the Pulse of their Food Spend
Experienced restaurant managers can probably tell you how much their restaurant is spending on food overall. They may even know a general number for their top categories. However, what they don’t know is how much food prices increase on a daily basis.
Why is this important? Increases of just a few dollars a day can add up to major losses for a restaurant over a few weeks. When managers watch their price trends on items and categories on a weekly – if not daily – basis, they can spot severe increases quickly and stop them from hurting the business’ bottom line.
Pro tip: Managers can look for less expensive substitutes for items that have increased in price. They can also check around with other local suppliers to see if there are less pricey options for the same items that are costing them big at other suppliers.
#2 Not Negotiating Better Prices with Suppliers
Managers who are keeping an eye on their food spend will understand what items the bulk of their budget gets poured into. They’re also usually the primary contact for talking to suppliers – often dealing with ordering, late deliveries, and missing or incorrect items.
The problem is, most managers aren’t communicating with their suppliers. They’re not talking to them about ongoing issues or price increases. But managers can’t expect better service or prices without first talking to his or her rep.
That’s why it’s important to sit down at least once a quarter with each supplier and perform a review. Managers should discuss price trends and service issues, as well as negotiate better costs on the categories and items they’ve purchased the most of from the supplier. This could save the business hundreds of dollars a month.
#3 Not Taking a Consistent or Accurate Inventory
Inventory is a labor intensive task, that’s (less face it) usually a sloppy process. As such, very few managers prioritize training their teams to do it well and on a regular basis. That’s the catch, though… most of a restaurant’s costs are tied up in what it has on hand and its Cost of Goods Sold. That means inventory represents how much money the restaurant is spending… or wasting.
Having a consistent and accurate inventory process in place offers a plethora of benefits: It minimizes food waste, determines what food and supplies to order, and is one of the biggest ways to cut costs.
There are several methods for taking inventory. Managers can use paper to tally up their counts and then enter all their information into spreadsheets. Or they can use archaic software that’s clunky and hard-to-use. The last choice – modern apps and software accessible on smartphones and tablets – are easy-to-use and inexpensive.
Business and Hospitality Go Hand-in-Hand
Prioritizing business goals over hospitality is often easier said than done, especially when managers have been trained to think the opposite way for most of their careers. But there’s no doubt that with a sober focus on tracking costs, negotiating with suppliers, and taking inventory, managers can make sure their restaurant does well.
Gone are the expectations that being in the industry means tiny margins and minimal profits. Instead, managers can rely on habits and processes that will ensure their restaurant beats the competition and thrives in the industry.
Having a business-first mindset doesn’t just benefit back-of-house process, but contributes to the overall health and effectiveness of front-of-house. So by running their restaurants as businesses, managers are actually accomplishing what they set out to: offer great hospitality.