Lots of people have aspirations of opening their own restaurant. It can be one of the most rewarding, fulfilling, and enjoyable career decisions – but for the same reasons, it’s also one of the most competitive. The F&B industry has notoriously thin profit margins, and running a successful restaurant business takes knowledge, experience, and a bit of good fortune.
The pandemic has underscored the importance of knowing how to run a profitable business. At Smart City Kitchens, we’ve supported countless restaurant businesses overhaul and streamline their processes to grow their profit margins. Aside from growing your revenue stream, cutting costs is one of the most efficient ways of doing this.
Read on for the best six ways to cut costs in the kitchen:
- Data-driven stock control & waste management
- Source your ingredients elsewhere
- Manage labour expenses
- Nurture a positive workplace culture
- Master your menu
- Transition into a delivery-focused kitchen
1. Data-driven stock control & waste management
Planned inventory management ensures you can meet customer demand whilst minimising wastage.
The problem? It’s often challenging to predict demand. Generally, it is better to order slightly more than what you expect to sell so you don’t run into shortages. Finding the balance for your restaurant doesn’t happen overnight and will take time to stabilise. Despite this, there are numerous techniques you can adopt in your food production to minimise waste. You could introduce a buffet wastage charge to de-incentivise people taking more than they can eat, or use excess cuttings and excess ingredients to create ‘seasonal dishes’.
On top of this, you can collect data and make adjustments accordingly in the long term to optimise your ordering and kitchen space. Food technology has enabled food delivery businesses to embrace data in their food production to minimise waste.
2. Source your ingredients elsewhere
Restaurant owners will be keenly familiar with how challenging it is to find reliable and affordable suppliers. For those who require complex ingredients, this search is even harder.
Taking the time to actively search for the best suppliers of ingredients and produce will ensure that you find the right deal for your restaurant. If you already have a supplier, alleviate pressure on yourself, and use them as a baseline for assessing potential alternatives. Remember, it’s important that you do not compromise quality for a lower cost, or you risk your reputation.
When using a CloudKitchens® delivery kitchen, you can consolidate suppliers for several food delivery brands. Making use of natural synergies like this will drastically reduce your long-run expenditure.
3. Manage labour expenses
A major expense for dine-in restaurants is labour. Having a large team of front-end staff to help during peak hours is not cheap. Understanding exactly how much staffing you need for food production is a great method of managing your costs.
If you have a labour-intensive dine-in restaurant, utilising a food delivery kitchen is an effective way of solving your inevitable labour expense. Deliveries require less manpower, as food is prepared and sent off for delivery with third-party couriers. Where a traditional restaurant may need 15 employees, 2-3 people are all that’s required for a CloudKitchens® delivery kitchen.
During the pandemic, as traditional restaurants were unable to support their staff during financial hardship, CloudKitchens® delivery kitchen thrived. Changing consumer habits have favoured food delivery over dining in, while reduced labour costs have meant that CloudKitchens® delivery kitchens have been far more successful.
4. Nurture a positive workplace culture
It’s not unusual for restaurants to have a high labour turnover. A consequence of this is that you will likely spend a substantial amount of time and money training staff – a waste of resources when they decide to move on.
One method of preventing this is to reward loyal staff, encouraging loyalty towards your restaurant. Incentives don’t need to be financial; team-building activities, an employee of the month awards, and simple recognition are just a few ways to make your staff feel valued. Positive workplace culture can mitigate labour turnover and cut costs significantly over the long term.
5. Master your menu
Every dish you serve will have a profit margin. Depending on the size of the dish, ingredients, and complexity, the revenue they generate will vary. To cut costs, you should assess the value of each dish in order to discern its importance to your restaurant. Focusing on dishes that generate the most profit will significantly improve your profit margins.
Sometimes a specific dish may be the focus of your brand, and removing these from your menu may be detrimental to your overall profitability. Therefore, it’s core that you find a balance between revenue vs value to your menu. A smaller menu will require less logistical work, especially supplying and storing raw ingredients.
With Smart City Kitchens, collecting data is made simple with state-of-the-art food technology, providing a comprehensive overview of each dish and your food delivery.
6. Transition into a delivery-focused kitchen
A trait shared by a lot of the successful restaurants during the pandemic was their utilisation of food delivery services as a supplement to their loss of dine-in revenue. Food delivery shortens your serving time, increasing output and revenue.
CloudKitchens® facilities are the most effective solution for restaurants wishing to transform into a delivery kitchen. With this highly optimised and low-cost business model, restaurants have been able to dramatically cut costs and increase their profitability.
All of this is improved when you embrace food technology like CloudKitchens® delivery kitchen. With reduced upfront costs and improved scalability, CloudKitchens® delivery kitchens are the one-stop solution to improving your restaurant.
Reach out to us
Smart City Kitchens is at the forefront of the CloudKitchens® delivery kitchen revolution. With a vast array of clients serving numerous specialised cuisines, we are the leading provider of CloudKitchens® delivery kitchens in Singapore. Fill out the form below to contact us today and get started on your food delivery overhaul!