Running a restaurant is expensive. That’s why cost saving measures are so important. Restaurant expenses can vary, hindering multiple aspects of the business. Extensive labor and few tech solutions can lead to poor customer service. Or, the lack of proper inventory control can make things more complicated in the kitchen. 

In this blog, we’ll cover the purpose of cost saving measures, the risks associated with not implementing them, and great options for restaurants. Without further ado, let’s begin. 

The Purpose of Cost Saving Measures

The purpose of cost saving measures is to sustain a productive and lucrative business. Without such practices, it could become very easy for a company to suffer financially. Cost saving measures also allow a business to be more flexible in the way they spend their money. 

Let’s say a restaurant owner doesn’t implement cost saving measures. Chances are, they won’t be able to hire additional staff members, like an executive chef or sommelier. Meanwhile, these are roles that can completely enhance the dining experience. Or, they may not afford to get creative with their restaurant marketing strategies. 

Regardless of how you earn and spend cash, cost saving measures should always be in effect. If not, operations can go downhill rather quickly. But more on that in the next section. 

The Risks of Not Implementing Cost Saving Measures

The whole point of operating a business is to turn a profit. If you’re unable to do so, it might be a sign that your overhead expenses are too high. Or, there could be an issue with your product line. 

Regardless of what the issue is, not implementing cost saving measures can be detrimental to a business. After a while, the following issues may occur:

• Financial instability, as you might often be without enough cash.
• An inability to sustain competitive prices within your local market. 
• The need to lay off employees due to a high cost of labor. 
• Unsustainable acts, whether it be due to food waste or energy usage. 
• Failing to meet expectations or provide a great customer experience. 
• More debt and interest payments if you can't pay bills on time. 
• Fewer investment and growth opportunities due to the inability to expand. 
• The inability to adapt to market fluctuations and downward economic spirals. 
• Financial strain, since you might not always be able to pay expenses and debt. 
• The risk of losing the business entirely if you fail to generate enough revenue. 

Avoiding these risks might seem more daunting than it really is. Maybe even more so for professionals in the restaurant industry. After all, the recent pandemic proved that this niche market can take a turn at any given point. 

To mitigate potential issues, it's vital to have a safety net. Anyone can achieve this by implementing cost saving measures. In the next section, we'll cover several that could work for you!

6 Cost Saving Measures for Your Restaurant Business

Cost saving measures can be taken one step at a time. Below, you’ll learn about six options that can help foster a more profitable business. Read on for the details!

1. Offer Online Ordering

Off-premise orders can cause a restaurant profit margin to skyrocket. Third-party delivery apps like Grubhub, DoorDash, and Uber Eats dramatically broaden a restaurant’s reach. No matter how low the restaurant seating capacity might be, the customer base can be massive. 

The more orders you can process, the more money you make. So, being accessible via online ordering apps can offset costs by making it so much easier to generate higher revenue. Plus, automation features can always be used to upsell orders and raise cart values.

2. Use a Restaurant Inventory App

Excessive inventory counts are likely driving up your restaurant expenses. But when you use a restaurant inventory management app like BlueCart, you can quit overspending on ingredients you don’t need. You’ll also be able to shop around and compare prices in a wholesale directory. 

Manually tracking inventory can be a nightmare. Between miscalculating quantities to managing shipments, there are countless things that can go south. But with the help of automated restaurant tech, all these tasks can become a breeze. Schedule a demo with BlueCart to learn all about it!

3. Conduct Menu Engineering

Menu engineering is the practice of analyzing your menu vs. sales trends to discover opportunities for change. If you operate a restaurant with an extensive menu, each item might not sell. At least not often enough to stock its ingredients–especially if they’re super specific. 

Storing ingredients that you might only use a handful of times can lead to substantial food spoilage. As one of the most influential drivers of restaurant costs, waste is something you want to completely avoid. If it’s a challenge, try implementing rotating daily menus or specials.

4. Implement Proper Shift Allocation

Shift allocation and staff optimization are more effective cost saving measures than you might think. When you coordinate shifts depending on the average sales volume for its time period, the labor cost levels out. 

Implementing shift allocation eliminates the risk of spending too much money whilst not generating enough cash flow. Meanwhile, those working busier shifts won’t feel a sense of work overload. It’s absolutely ideal for everyone.

5. Conduct Organic Social Media Efforts 

Depending on how you use it, social media can be one of the most powerful tools you use. The best part? It can be completely free. In fact, it's always free at first.

As you probably already know, most businesses utilize social media to gain visibility. As more people become aware of your restaurant, the faster you'll reach revenue goals. If you do social media marketing well enough, you might even surpass these milestones. In turn, you may be able to offset some of your biggest expenses.

Social media even gives you native analytics dashboards. So it's easy to track progress. Just ensure that you know how to calculate the social media ROI to accurately measure performance. 

6. Adopt Sustainable Efforts 

Sustainable restaurants often use cost saving measures. Water and energy conservation are likely at the forefront of their efforts. In turn, it's simpler to be a “green” option. Plus, eco-friendly restaurants have a competitive advantage over other local eateries. 

It’s also common to find energy-efficient restaurant equipment in brick and mortar facilities. Many restaurant lighting fixtures, appliances, and gadgets use minimal power. Such options allow you to keep the business in motion with lower utility bills.

Frequently Asked Questions About Cost Saving Measures

Whether you simply have an entrepreneur mindset or are a seasoned business owner, cost saving measures should be on the table. In this FAQ section, we’re going to cover additional details on the topic. Hopefully, the following information will be helpful when planning your finances. Read on!

What Are Cost Saving Measures?

Cost saving measures are tactics used in order to cut recurring expenses and build wealth. They can be for businesses or personal cost-saving efforts.

What Is An Example of Cost Savings?

An example of cost savings would be if a restaurant experienced higher profits after reducing food waste. In this example, it’s plausible to believe that the restaurant owner chose to invest in an inventory management system. The decision was likely made to reduce purchasing excessive quantities. And the less food that goes to waste, the more there will be to sell.

How Do You Implement Cost Saving Measures?

There are many ways to implement cost saving measures in your business. Some of the most straightforward tactics include:

• Reducing electricity usage
• Reducing gas usage
• Reducing water usage
• Cutting labor expenses 
• Using a less expensive facility 
• Reducing food spoilage and waste
• Using a more streamlined supply chain

What Are Cost Saving Measures In Business?

Cost saving measures in business refer to best practices that cut operating expenses. Such tactics can include a reduction in labor, streamlining the supply chain, using smaller facilities, and more. Cost saving measures in business are often the result of strategic decision-making. In turn, they help the brand's financial health.

What Is a Better Way to Say Cost Savings?

Other terms for “cost savings” include:

• Money savings 
• Cost efficiency 
• Debt planning 
• Financial planning

Now Let’s Save Some Money!

If you constantly lay out money and don’t retain any savings, the longevity of your business may not be in the cards. However, this doesn’t have to be a risk for your company. Did you know that Revolution Ordering offers tech solutions to businesses so that they can accomplish more with fewer tools and people? We make it that simple! After you book a demo, the conversation will be in motion regarding how you can use innovation to save money. Ready to get started? Let’s talk!