In this post we want to help you find and locate cost saving opportunities on your rent, advertising, equipment and utility bills, you can reduce expenses and increase profits in your restaurant.
How to reduce overhead costs
Many of the expenses that influence restaurant costs are fixed expenses, but there are some actions that can be taken to reduce overall costs. Taking steps like negotiating with suppliers and owners or buying newer, more efficient equipment can have a big impact on your bottom line.
A general guidelines to reduce the general expenses of your restaurant, are the following:
• Calculate the general expenses of your restaurant
• Find ways to reduce your restaurant rent bill
• Save money on appliances and supplies from your restaurants where you can.
• Implement practices to reduce your restaurant's utility bill.
• Try low-budget advertising and marketing ideas for your restaurant.
What are overhead costs?
Overhead costs refer to the ongoing expenses involved in running a business, such as rent, utilities, advertising, and salaries. However, it is important to note that overhead only applies to expenses that are not directly related to the production of goods, so the cost of ingredients and raw materials are not factored into overhead. .
Typically, overhead is calculated monthly, but you can also calculate your overhead by day, week, or year. Once you have your overhead costs, you can make comparisons and take action to lower that number and save money.
Once you have your overhead expenses for a given month, you can use them to find out how profitable your restaurant is. A useful metric is your overhead as a percentage of your sales. To calculate the percentage of overhead for your restaurant, use the following formula: Overhead / Total Monthly Sales x 100 = Overhead as a percentage of sales
If the percentage is below 35%, it is a sign that your restaurant is operating efficiently, but if it is above 35%, you should take a close look at your expenses and consider looking for ways to cut costs.
Tips to reduce costs in your restaurant.
Rent is one of the biggest monthly expenses in restaurants. It can be difficult to have significant reductions in rental expenses, but here are some things you can do to reduce restaurant overhead caused by rental bills:
1. Renegotiate your lease
If you have a month-to-month lease, talk to your landlord about renegotiating your restaurant lease. Your business is a constant stream of income for your landlord, so he may be able to make a deal with you, especially if he agrees to stay there for a while.
2. Sublet your restaurant space
Subletting your kitchen space is becoming a more popular and available option today. After hours or early in the morning, you can rent your location as a kitchen to other businesses, such as food trucks and catering companies, that need a space for food preparation.
Equipment is a significant investment for restaurant owners. Look for an online equipment provider that offers benefits like regular customer discounts or free shipping on business equipment.
Buy Newer Models: Replacing old appliances with newer models can save on repair costs, as well as your utility bill, because many newer appliances have energy-saving features.
Choose energy-efficient models: While energy-efficient appliances can be more expensive than standard equipment, the money you'll save on utilities will over time make up for that difference.
Choose from the missing equipment section - you can find new equipment that is being sold at discounted prices due to minor scratches or dents. Damage does not affect performance and customers will not see superficial faults in their internal equipment.
Add a Decarboniser Tank - Depending on the volume of dirty utensils, decarboniser machines can be a good investment. Decarboniser machines can replace part of your utensil washing staff, reducing your salary expenses and the costs of services and consumables.
To reduce your utility bills we advise the following guidelines.
Using energy-efficient appliances is a great way to save on public utilities.
But there are some other steps you can take to lower your bill even more.
Thaw frozen food in the refrigerator instead of putting it under water.
Turn off lights in areas not in use. Plus, you can further reduce your electricity bill by using energy efficient lighting such as LED bulbs.
Buy equipment like pre-rinse spray valves and faucet aerators that reduce the amount of water you use in your dishwashing station.
Don't overload your refrigerators and cold rooms. These appliances work by circulating cold air and, if the refrigerator is too full, the air cannot circulate.
Put a large load in the dishwasher instead of doing several smaller loads throughout the day.
Low budget advertising and marketing ideas. Investing in advertising solutions and trying free marketing tactics can build a huge boost in your restaurant's sales and help offset your restaurant's overall costs.
Social media is an excellent mobile media marketing tool for reaching a wider audience. With sites like Facebook, Twitter, and Instagram, you can post photos and videos of your delicious food to attract people to your restaurant.
Additionally, social media allows you to inform customers about new menu items, daily specials, and upcoming events at your restaurant. When you engage with your customers and answer their questions, you are reaching out to all of their followers and connections, which can lead to new business.