For any business, a higher profit margin is necessary when looking to expand and grow. In the restaurant industry, however, the owners are constantly looking for ways to increase their profit margin since food costs tend to be so high. According to Natural Resources Defense Council, 30-40% of the food production is wasted in the U.S. and needless to say, this problem can be traced back to the restaurant industry. With wholesale prices witnessing a decline over the last five years, it might be time to come up with a strategy to cut down the food costs for your restaurant. Here’s how you can achieve this:
1. Inventory Management
Most restaurants do not have a strong inventory management system, which leads to unnecessary waste and extra costs. Before you consider growing your business, you should have solid inventory practices in place. Revisiting your inventory regularly can help you identify waste and track usage. This can help you determine the right time for ordering food supplies without having to deal with spoilage and waste.
2. Use Data for Forecasting
By having a strong inventory management system in place, you will find yourself in a better position to predict future needs. With the help of data gathered, you can also forecast the number of guests visiting your restaurant on a particular day. With the passage of time, you can create predictable and efficient patterns for prepping and ordering processes.
3. Employee Training
Your employees are the most important people to help you reduce overall food costs. Create awareness about what you are hoping to achieve and identify ways to engage your employees. By doing this, you will be able to motivate them to track their share of food waste and reduce it. Encourage them to create a waste chart and write down the instances of waste so that you can avoid them in the future. Employees can also offer useful suggestions that you can use to increase your restaurant cashflow.
4. Revisit Portioning of Meals
You can also manage your food costs in a significant way by revisiting your food prices and the portions of every meal you serve. If you notice customers leaving a portion of a particular dish offered, you might consider reducing the size of the meal. In such a case, you will not need to cut down the price, which means that your revenue does not get affected.
5. Work More
Increasing the amount of prepping involved can also have a direct impact on the food costs. Rather than buying prepared patties, you can ask the employees to make their own, or you can also try and maintain an in-house chicken supply to avoid significant costs.
To increase your restaurant’s profit margin, try implementing some of the best practices listed above. Minimizing waste won’t happen overnight, and you might need to hire additional staff or invest in inventory management software. If you need additional funds to make the necessary changes, consider a working capital loanfrom ARF Financial! With a simple funding process, ARF Financial offers flexible loan terms up to 36-months, affordable rates, and no collateral is required. Click here to find out how much you qualify for. Approvals are granted within 48 hours.