Integral to the success of your restaurant is the ability to maintain a healthy bottom line. But remaining profitable in a market as challenging as this one is no mean feat.

The little things add up – quickly; costs you’ve long since forgotten will quietly eat away at both your cash flow and profit; unexpected outlays will do their level best to ruin your end of year. There’s an awful lot to take into account (literally) as a restaurateur, but there are a few things you can do that will provide your business with solid financial footings.

In this post, we’re going to list some tried-and-tested techniques for balancing the budget and ensuring your restaurant business is as profitable as it should be.

Keep an eye on escalating costs

Wet and dry stocks are perfect examples of overheads that will continue to rise for as long as the market remains unstable (and few of us in the industry can remember a time when the market was stable).

It goes without saying that any outlay on food and drink will directly impact your bottom line, and may force a price hike to compensate for any supplier increases. You should resist this at all costs, because customers will quickly notice when your restaurant becomes more expensive than it once was.

Instead, keep a very close eye on supplier prices and make adjustments to your order levels or the suppliers themselves. Even if you’ve been wedded to the same butcher for years, heading to the competitor down the road might yield a far lower overhead when it comes to purchasing your raw meat ingredients.

Update your POS system

Running an outdated POS system that is incapable of providing meaningful reports or a decent level of stocktaking is a surefire way to say goodbye to a healthy bottom line. You need decent reporting in order to find out what’s really going on within the purchasing operation of your business, and you’ll only get that with the latest technology.

There will of course be a capital investment involved in implementing a new POS system or updating the one you currently have, but remember it should be tax deductible, and the savings such an investment will offer over time will be more than worth it.

Maintain good inventory management

As alluded to above, the ability to conduct stocktaking with the latest tools is vital if you’re to remain profitable. With the cost of raw ingredients increasing, it’s important for every restauranteur to keep an accurate, efficient log of their inventory.

In doing so, you’ll be able to avoid running into too much wasted produce, or finding yourself short on essential ingredients.

Equally, if you’re carrying too much stock, that’s nothing more than dead money sitting within your larder or fridge. Maintaining good inventory management will ensure you preserve profits by holding onto exactly the quantities of stock you need at all times.

Watch out for over-portioning

This is a classic mistake made by experienced and new restauranteurs alike. By over-portioning your dishes, you’ll quickly and silently eat into profits.

It may feel a bit mechanical, but by spending time correctly portioning the items on your menu, you’ll maintain a healthy bottom line and the customers will be none the wiser. You’ll save a considerable amount of staff time, too!

Work hard on recipe costing

There are a few jobs restauranteurs dread, and one of them is almost certainly recipe costing. That’s a shame, because it isn’t as difficult or laborious as you might expect, and the benefits of being diligent in this area are considerable.

The most welcoming restaurant in the world won’t last long if it doesn’t have a handle on the true cost of its recipes.

Recipe costing isn’t a ‘fire-and-forget’ routine, either. Once you’ve weighed up your menu and correctly apportioned a cost to each dish, be sure to regularly check back. Remember – raw ingredient costs are increasing all the time, and your original sums will soon become outdated and incapable of delivering a decent return.

Wrapping up

There’s no getting away from it – the tips above will result in a fair amount of additional work for you and your team, but it’ll be worth it – big time.

Every restaurant should have ample chance to succeed in this market, and if you follow our advice, you’ll set your business up to be profitable, strong and capable of impressing its guests for a very long time indeed.

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