Cutting Costs

By Jessica Lee

It is a common practice for people to cut the fat off of their meat before cooking it. Similarly, when running a restaurant, it is essential to cut the “fat” off of whatever is holding your business back from making higher profits. In other words, slashing the costs of what is not necessary is important to the financial health of your establishment.

Typically, the expenses are split up with a third of spending going into hiring labour, a third going into food, and the rest goes towards everything else, including rent.

In a Canada-wide survey of 2,000 restaurants, The Bottom Line, a guide that has statistics of Canada’s food business budgets reports that the average Canadian restaurant spent 31.4 per cent on food and beverages, 26.1 per cent on salaries, wages and benefits and 12.2 per cent on rent in 2010. The rest was spent on entertainment, utilities, and other expenses.

Richard Wade, a hospitality management professor at Ryerson University and restaurant consultant, suggests that no more than 10 per cent of the costs should go into rent.

Since the cost of rent is often not flexible, variable costs in running a restaurant are usually limited to just labour and food.

To save on labour costs, Mike Wilson, a restaurant consultant based in Toronto, advises having the management team work longer hours to cover some of the hourly paid employees, since managers are paid by salary. However, Wilson warns that this method should not be casually employed as it puts more stress, sometimes too, much on managers, which can lead to further problems like mismanagement of the staff.

Wilson, who has 35 years of experience in the restaurant business, began his career in culinary school as a chef. He has worked in a hotel, various restaurants, and also for the largest food manufacturer in the world, Nestle.

While he does not openly recommend buying cheaper ingredients to save on costs, he says, “If it’s a small part of the ingredient, it doesn’t necessarily affect the quality.”

He advises chefs to make the same dish using different brands of flour or sugar. If there isn’t a difference in the quality of the food, and one brand costs less than the other, it makes economic sense to switch brands. For example, if a baker making bread saves 10 cents a loaf by using less expensive flour, he ends up saving $100 per 1,000 loaves sold.

“The best quality [foods] taste better in the end,” Wilson says. “But if it’s a small ingredient like coriander seed or something like that, it doesn’t make a big difference.”

“If you’re talking about something like saffron … that makes a big difference, if it’s something delicate.”

Vegetables should be as fresh as possible, he adds.

Many restaurants will also try to work out a deal with food suppliers.

In Canoe Restaurant’s case, since the restaurant belongs to a larger chain, Oliver & Bonacini, the company has saved money by buying in bulk for all of its restaurants, according to  general manager Paul Martin.

Besides being known for its view (the restaurant is situated

Once the food is bought and prepared, many restaurant experts recommend making sure that the right portion is on the plate.

 “I have stood in the kitchen looking at all the food that is coming back on the plates, and seeing what keeps coming back on the plates. Maybe you see a lot of French fries that are coming back or mashed potatoes,” Wade says.

At Canoe, food is weighed before being served on the plate. Martin any serious restaurant that would weigh its food beforehand. Even drinks are measured at Canoe.

“For glasses of wine, for example, we use a cortino, which is a little craft which has a lined edge on it so we know how much to pour into [the glasses]. For everything else, we use shot glasses and make sure that everything is proper. We won’t do free pouring as some places might do,” he says.

While measuring may seem like a hassle, it will save you dollars in the long run.

Monitoring inventory levels and keeping an inventory that matches your needs is also another way to reduce costs. Keeping inventory low reduces the waste in unsold food. It also keeps track of what is supposed to be in stock.

“If there’s a fluctuation in [our inventory numbers], we’ll know that something is not alright,” Martin says.

Dishonest employees could also mean losses. Wilson recommends setting up security cameras and making sure the back door is not close to the kitchen in case of internal theft. When the restaurant is busy, and managers are focused on the customers, “things can walk out the back door,” he says.

Some restaurants will go as far as not letting the employees take out trash without the manager’s approval. Dishonest employees may throw out expensive items such as wine and rescue them later when disposing of the trash.

Wilson also recommends using clear garbage bags to see what is being thrown out. If there is a lack of training, some cooks may throw out usable product without knowing it.

“There’s very little waste in the kitchen [at Canoe],” Martin says. “Everything that we butcher that isn’t used in a specific dish can be used in a sauce of some kind.”

Removing the garbage cans from the cooking area, and giving employees clear plastic bins to throw their scraps in, also helps monitor waste. Managers can then make comments to the cooks and re-train them if good, usable product is being thrown out.

Training chefs to learn new skills such as butchering also saves money paid to meat processing centres.

When you train your chefs, also include your managers.

 Professor Wade, who has had over 50 years of restaurant experience, says that managers should be able to do everything that their staff members can do.

“One of the problems restaurants get into,” he says, “[is that] they don’t know much about food preparation and they leave that with the chef. Well if the chef then says, ‘Well I’m going to leave,’ then where are you at?”

None of your staff should feel indispensable,” he adds. “It’s much better if they know you can do their job.”

Wade stresses that conducting research, knowing various skills and being prepared is essential to keep the business running. For new restaurants, he encourages plotting out all the expenses they will need, and to really do their homework.

“All too often what restaurants will do is underestimate their cost of opening a restaurant and so what happens is they become under-financed, so when they actually open their restaurant, they’re already sort of ‘tapped-out’ financially,” he says.

He adds that new restaurants should operate under the assumption that they won’t be making any profits for three months, or even a year. He also does not recommend trying to cut costs or cutting down staff when first opening.

“You don’t want to be displeasing your customers simply by cutting back on staff or cutting down on portion sizes or simply taking shortcuts with the food preparation.”

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