With inflation of the Pound threatening to make food prices higher, managing food and beverage costs has become a top priority for many restaurant owners. Adjusting a restaurant to accommodate these higher prices while still making a profit and providing the same caliber of food and service is a balance.
Anthony Ciavarella, managing director of bar consultants for Barmetrix, a global consulting firm with offices in London, works with restaurants and bars on everything from customer service and business strategy to costing. Below, he shares six ways that restaurants can stay ahead of rising prices and manage their food and beverage costs.
Know Your Potential Profit & Your Actual Profits
“Conduct regular stocktakes that show your actual against your potential gross profit (if all items were sold at full price and with no losses) and, most importantly, identify where any variances are occurring. If your achieved gross profit is a long way from your potential gross profit, have systems in place that can identify where any losses are coming from.
There are any number of internal products available and an external stocktaker, like Barmetrix, that has specialised tools to help guide your teams in hitting their full potential and giving them hours back in their week they otherwise would have spent counting stock.”
Time is also a Cost
“Time to prepare often isn’t considered highly enough by operators when they’re putting together a menu. A complicated cocktail or dish may take team members a few minutes to make, reducing their revenue potential and increasing wait times at the bar or table. Time how long it takes your weakest team members to make each potential menu item and factor this in.”
Adjust the Margins on Your Top Sellers
“Keep an eye on your top 10 sellers, you may be surprised at the percentage of sales they represent – we regularly see the top 10 representing upwards of 50% of total sales. Optimising the margins on these products can have a big impact on your profitability, use your volume figures when speaking to your suppliers for better cost prices and ensure your retail prices are in line with your competition.”
Get Staff on Board with Managing Costs
“Ask staff members what profit, as a percentage of total sales, they think the venue makes. I always ask this question in training sessions I conduct and I often get figures over 50% coming back because they see the money piling into the tills but don’t understand the costs involved. They are usually surprised to hear the average venue can expect around a 10% return, if they understand the financial reality of running a bar or restaurant it can change attitudes and get them on board.”
Maximise Bar Real Estate
“Alcohol is always going to be a high cost area so have controls and procedures in place to identify and correct any unknown variances. Identify dead stock (items that never sell) and remove it to free up space for products that do earn their keep.”
Portion Control is Key
“Ensure your portion sizes are adhered to, we had a client whose weekend staff were very heavy handed with the fries, once corrected, saved them hundreds of pounds and storage space.”