Best ways to navigate the numbers crunch

[ryanwanner]

Hello F&B community!

As is shown in the headlines nationwide (at least here in the US), restaurants are seeing some significant cost pressures. Closures have been announced at a staggering pace. In fact, here in Colorado Springs, over 10 restaurants and breweries announced their closure in just the last two weeks!

We can sit here and discuss the reasoning behind the pressures: increased rents, payroll costs out of control, cost of raw goods, paper costs, utility costs, insurance costs, etc. etc. etc. We all live in this purgatory right now, we don't need to focus on the problem.

Let's focus on the solutions: what cost trimming measures have you started working on in order to survive this crunch?

For me, my first big leap was to close my cafe in late 2023. My landlord and I could not come to an agreement on rates, and I took it as a sign to run away. In hindsight, I realized this was the best for the survivability of my business. I was able to focus my menu on just the coffee roasting aspect of things, find a brick and mortar where the rent and utilities are a third of what I was paying, and for now work it just by myself. I'm not saying that drastic of a cut would work for everyone, but maybe you could figure a way to subdivide your space: do you need that big of a dining room anymore if the majority of your service is to go anymore?

After that, it's been a constant monitoring of what is and isn't selling, and making tough but necessary cuts to the menu. If it's a profitable item, it stays. If it's consistently in the bottom 10 of sales volume, it goes. Does it take extra prep time that takes a team member away from something else?

Pricing: when I first entered the manager stage of my foodservice experience, the number I was told to always keep an eye on over everything else was the Food Cost. At that time, the labor dollar wasn't nearly as important in my market: servers were still making $2.13/hr. Nowadays, I've found that if I don't continually monitor the cost of the labor at least as hard as the food cost, things get out of control very, very quickly. So I've changed my thinking to ask what is the prime cost for the menu items? Prime being the cost of the product plus the cost of the labor to make it. Hopefully the prime is below 60%. Don't forget to factor in the cost of the dishwasher who washes the plates and line tools! You may end up finding out that your pricing strategy needs to improve. I know I did the last time I looked at these numbers!!

I'm curious to hear what innovative tricks you've come up with to keep costs as low as possible without affecting the customer experience!

[Donnie-M]

@ryanwanner I hate to say it, but labor is a big big deal now to maintain great service and team members.  Pre-cut produce and self checkout have become increasingly attractive.

[SVLFever]

@ryanwanner we have become quite familiar with the "bulk" purchase of things that we know will not go bad, such as liquor.   Although it can increase my inventory cost and reduce some cash flow, the benefits of getting x bottles of liquor free helps keep the pour cost down.

We also "cleaned up" our menu to better cross-utilize menu items and eliminate the one-off items (such as pineapple for the hawaiin pizzas).    In doing so, we have greatly reduced the waste on items that we were not going through fast enough before spoilage.   

This two basic things have helped reduce our menu costs, which invariably helps keep the prime cost in line as well.

Hope this helps!

[BofBArtStudio]

I have also had to really focus on labor cost in the past year especially, but these past few years for sure.

I use a similar method of trying to calculate my "prime" cost as a factor of supply cost plus labor cost. 

It is also something that I have trained my managers to be watching each day and week and month in order to better schedule the team and keep those labor costs at a realistic level. 

We utilize the labor versus sales report in Square, however that doesn't have the whole picture of labor cost because it doesn't account for PTO, sick pay, and other important amounts that could heavily skew the percentage of labor cost compared to the sales. 

However it is a great baseline to start with when we are analyzing these numbers. 

I also try to be under 60% for supply/cogs plus labor.

We also track notes regarding specific days of the year so that we can better schedule for those heavily busy days such as the Monday holidays, or especially slow days such as the annual barbecue and beer festival that draws thousands of people on the other side of our downtown area and away from strolling into our store.

The main thing for me has been to just really focus on the numbers everyday and every week and every month. What caused us to be down today compared to the same day last week or last year? What caused us to be so fantastically up today compared to this same day last week or last year? And keeping my managers in the habit of viewing those numbers as well so that we can always be sure to keep cost versus revenue in line and adjust immediately for anything unexpected.