5 Common Issues Costing Restaurants Money

1. Paying staff the minimum saves money.

This is sometimes a thorny one. Pay in the F&B industry is known for being crappy, but some restaurants take it to a new level in the belief that saving money on labour will save the restaurant money. Its just not that simple. Humour me if you will:

Restaurant “A” refuses to pay kitchen staff anything above minimum wage. Before deductions which include, breakage, coffee, uniforms etc. Same said restaurant comps R600 - R800.00 on meals sent back with an additional R1500 +- in wastage value. The staff in the kitchen are far from the best because the good ones stay under the premise of good pay & as soon as they find out the truth of the matter they leave going to better paying positions. The staff that stay are far from really interested.

At this point remember that 80% of the people receiving bad plates will not return.

So how would paying better salaries help? Proper kitchen structure with a good leader and looked after staff become far more productive and cost efficient because they care. They wan to not add to the wastage, they pride themselves on delivering better plates of food. They respect management enough to not want to let them down. This in turn filters through to guests by better products arriving in front of them, more smiles, more drive. Still further, better looked after = Better qualified = Smaller staff contingent.

The above uses the kitchen as an example but plays true for FOH as well.

If you find yourself in the situation where your staff get paid above average but still don’t perform, then you have hired incorrectly. Simple.

2. Locations based on…… location.

Far to often proprietors are seduced by lousy estate agents selling pretty shells. Your view will not pay bills and ups your rent drastically. This can be disastrous. Ideally your rent should not exceed 15% of your monthly takings. To put this into perspective, your average small, franchised coffee café struggles to make R200 000. At those takings rent cannot exceed R30 000.00.

Next let’s touch on LSM (Living Standard Measurement). If you have never heard of this visit http://www.eighty20.co.za/lsm-calculator/ What level LSM are you aiming for in your marketing? Not sure? Call me... Jokes aside, you need to take this very, very seriously. What LSM populate your location? Do they match your menu etc? What % of the time does said target market spend in the area of your local?

Next, work out an average of what each seat is costing you and weigh that against its value based on average takings against total pax against number of seats. These answers will probably surprise you. Is your location costing you money, or making it?

3. Special Shopping

Daily emails from suppliers got you reaching for the phone? Stop. Buying bulk specials costs you money! How? Cost of storage. Besides the power etc of it all, when you stuff your storage space full, fridges break, become untidy, wastage goes off due to soured produce, pest control costs increase, etc.

You will be amazed how much you save by ignoring those emails. Try it.

4. But…. We have Face…page, thingy

Online marketing is free. If you pay a marketing company to do your promoting you are paying for their costs and service. Here knowledge becomes wisdom. A website costs around R200.00 pm in hosting. +- depending. Social media posts are free. So……what are you paying R7000.00 pm for? You pay for their time. Learn to do it yourself. Why not? Don’t get me wrong. There companies out there that offer you bang for your buck. Unfortunately, they are a industry minority. Do yourself a favour and google restaurants in the same area as yours. What % of the content that is found is yours? If your content is not dominant, your company is not doing their part.

5. Just times it by three ……. & a bit

Why not just multiply by 3.2? Like maths? Good. Keep up now.

Tomato costs: R1.25

You need 30% Food Cost.

R1.25 x 3 = 3.75

Is that right? Not in the slightest.

What % is R1.25 of R3.75? Try 32.2. Congratulations. You just lost 2.2% with a value of R0.46. Just on the tomato.

Considering tomato will be probably one of many ingredients in any recipe, well, you get the idea. Now, factor in the ever present human factor and you are looking at a actual % of around 36-40%. Multiplying by three is very common in restaurants. If you use it, stop. Cost correctly.

Simple equation would be R1.25/0.3 = R4.16.

Know costing. Know it’s a many faceted process with more possible outcomes then Zuma has excuses.

I base my career around aiding restaurants with the above and much more. If your outlet is not financially stable, don’t wait for it to collapse. Speak to someone. I’m never further then a call away.

Cheers For Now