It’s no secret that running a food business means navigating the slimmest of profit margins. While some restaurants can achieve a 15% margin, the average is only between 3% and 5%. There is only so much you will be able to charge before customers complain, so you can’t move in the direction of price increases for long. And it’s not like a restaurant has a diversity of product lines that can help create sales. So the most effective way of optimizing profits is by cutting costs. Below are some great suggestions for doing just that. A warning though: I don’t pull any punches when it comes to stressing that YOU, dear reader, are the one that needs to take responsibility.

Inventory Management:

Implement efficient inventory management practices to reduce food waste, spoilage, and overstocking. Regularly track inventory levels, use first-in-first-out (FIFO) methods, and negotiate favorable terms with suppliers to minimize costs. There is a reason this point is the first one on the list. With so many ingredients in the average kitchen, it can seem impossible to keep track of it all, and it nearly is. But you have to try your best, because the consequences of overlooking something that spoils are incredibly costly.

Menu Engineering:

Analyze your menu to identify high-cost, low-margin items, and consider revising or removing them. Focus on promoting high-profit items and dishes that use cost-effective ingredients. Don’t be afraid to change the meat in an entree. Experiment. Do your research and actually act as though you like food and cooking. When chicken breast prices shot up last year, many restaurants switched to thighs (until they also went sky high) without much of a problem. In fact, some made the change permanent when they found out customers loved it so much.

Supplier Negotiations:

Negotiate with suppliers for better prices, discounts, or volume-based deals. Building strong relationships with suppliers can lead to cost savings over time. Just remember to treat it like a real relationship, not in terms of what you can squeeze out of them, but how you can best ensure continued interaction. They work for a different employer, but both your goals are the same.

Supplier Diversity:

Have accounts with multiple vendors. Utilize local supermarkets and farmer’s markets. If you can do it honestly and respectfully, play them off each other. Come out and tell your produce guy that another company is cheaper or offers more. Give him the chance to fix it. Put that good relationship to the test. Otherwise, you want to diversify because you’re playing within a market of goods that are cheaper in some places and costlier in others. The alternative is you encouraging a pricing monopoly by dealing with only one vendor.

Energy Efficiency:

Adopt energy-efficient practices, such as using LED lighting, energy-saving appliances, and programmable thermostats. This can reduce utility costs significantly. And you don’t have to drink the climate crisis juice to be on board with this. It’s a fact that energy is costly, and since heat is energy, and since you use a lot of it, it would behoove you to use it wisely. Of course, this suggestion requires some costly upgrades, which you will have to see as an investment. Replacing your equipment won’t be cheap, nor is changing over your HVAC system. But if you see yourself occupying that space for a long time, then adopt a plan that moves toward it. Take some time to write up a list of changes and prioritize them by cost and necessity. Then map out when you would like to have the projects done. Don’t forget to research what is efficient and what is just plain old quackery. Remember, you want changes that will save you money. And please, do it to maintain your business, not to save the planet.

Labor Optimization:

Evaluate staffing needs during different business hours to avoid overstaffing. Cross-train employees to handle multiple tasks efficiently, reducing the need for additional specialized staff. Identify which of your employees shows the most initiative and promote them. Treat your employees in a way that makes them want the best for you and the business. Have family meal, consistently. Create multiple A-level employees, then make sure that at least one of them is on each shift.

Streamline Operations:

Optimize workflows and processes to improve efficiency and reduce wasted time and resources. Regularly review operational procedures and make adjustments where necessary. Maybe it’s more efficient to have all hands on deck when the delivery comes, or maybe it’s better to have one person scheduled to put it away. It will all depend on the size of your operation and your space. Each night, run through the day’s work in your head and try to identify weak points. Again, act as though this is your life. Act as though it is something deserving of your time and attention. Put the required amount of thought into it.

Food Portioning:

Train staff to portion food accurately to avoid excess waste and control food costs. Waste is probably the most costly part of running a restaurant. I once tracked food waste in my kitchen for three days. In that time, I threw away over 200lbs of food, costing me hundreds of dollars. It literally pays to teach your prep guys to cut vegetables and meats properly, so that excess trimming is not taking place. Get everyone together and let them know that they need to be conscious of what they use and how much, cooks and wait staff alike. There will always be waste, that’s an undeniable law of physics. Your job is to minimize it so that you’re not throwing excess money away.

Recycling and Waste Management:

Implement recycling programs and manage waste efficiently to reduce disposal costs. Waste companies typically charge by the haul, up to $500 for a 10yrd dumpster. So the less frequently you have to have it hauled away, the less you pay. How do you manage that? Throw out as little as possible. Donate foods that are near expired. Use that thing called a computer to look up whether there is a network of couriers that will pick it up, similar to Table to Table’s I-Rescue app. It allows Bergen county restaurants to contact driver volunteers that will come and pick up the leftover food. There are so many organizations that will free you of your extra food that it will leave you with no excuse. You can also use excess food for family meal. Send some food home with your employees. Identify the biggest source of waste in your establishment, then determine how to cut it down.

Marketing and Promotion:

Focus on cost-effective marketing strategies, such as social media, email marketing, and partnerships with local businesses. A Facebook page is free, and so is Instagram. A MailChimp Standard account is only $20/mo. Never before has it been easier and cheaper to advertise on your own. And if you don’t think you have the expertise necessary to work all that tech, ask your teenage daughter or niece. Do you have a youngish employee that you can trust to be your social media director?

Monitor Food Costs Regularly:

Track food costs and other expenses regularly to identify trends and make necessary adjustments in a timely manner. Learn and get comfortable with Excel. I personally have been tracking the prices of basic commodities for two years. I can now look back and see when during the year a certain item is cheapest. It’s remarkably helpful. So, research agricultural markets and study ingredients. You can easily track the supply and pricing with the USDA Market News app. Eventually, you’ll internalize this stuff and you’ll remember when you can get the best deal on something.

Let me be clear: reducing costs is about discipline and responsibility. That is the bedrock upon which all of these suggestions are built. You will not succeed in business unless you grow up and start acting responsibly. You did not open a restaurant to provide a hang out for your friends, you did it because you love to cook and you wanted to be your own boss. Now accept the fact that you actually do have to act like the boss. Recognize that you have employees that count on you, customers that support you, and a community of businesses that expect you to help represent the town. Develop better habits. Get adequate sleep. Stop smoking and drinking. Adopt this mindset and executing the above suggestions will be possible.