There are hidden profit killers in every business.
Some of them are easily spotted and just as easy to deal with (the company-owned van that spends half its life being fixed), while others are somewhat trickier (the long-serving employee who has retained his job through convenience rather than talent).
But deal with them you must, because it’s often the smallest profit killers or those that are emotionally charged that are capable of putting the business on it’s knees.
If you run a restaurant, here are six hidden costs that might be putting your business at risk:
1. Employee turnover
In 2016, the employee turnover rate in the hospitality industry topped seventy percent for the second consecutive year – a figure that neatly demonstrates just how hard it is to hold onto staff as a restauranteur.
Think about your own operation; how often do you have to advertise for new staff? How many front of house managers have you been through in the last twelve months?
If the revolving doors are swinging far too readily, you need to look at what’s going wrong behind-the-scenes.
2. Poor accounting system
If you’re still relying on a hacked-together spreadsheet to do your accounts, you’ll stand little chance of identifying bad spending habits.
Modern accounting software provides a far better view of exactly what’s going on. Beyond accurate profit and loss figures, you’ll be able to look closely at individual cost centres and immediately see where you’re spending too much.
3. Customer retention
It’s a lot cheaper to retain a restaurant customer than it is to go out and find a new one.
If people enter your restaurant’s doors following a costly marketing campaign but never return, you’ll have to do it all over again.
Do all you can to make your new customers feel special and tempt them to return with brilliant customer service and the absolute best dining experience you can offer. It’s worth the effort.
4. Bad portion control
Consistency will ensure your restaurant remains profitable.
Portion control might sound boring and entirely at odds with the home-cooked philosophy behind your menu, but it’s vital if you’re going to keep your costs under control.
Portions should always be weighed and measured by kitchen staff. Beyond keeping the cost of each plate of food consistent, you’ll also ensure no diner is left feeling shortchanged.
5. A useless website
Potential diners will want to book online, and if your website is slow, unresponsive, in constant need of a fix by the expensive company that built it and – worse still – doesn’t allow online booking, you’re missing out on oodles of profit from new diners.
Get yourself a decent website and online table booking system – it’s one of the most effective investments you’ll make this year.
6. Staff theft
This is one of the most unpalatable reasons for a dwindling bottom line, but it’s an unfortunate fact of life in the hospitality industry.
Employee theft – while not rife – does take place in this sector and it might be happening right under your nose.
If you’re suspicious of someone, you may be onto something. Look for the telltale signs, and take action as swiftly as possible.
Every restaurant is different, but the above are the most common issues associated with poor financial performance.
That’s not to say we haven’t missed something blindingly obvious, though. Share your experiences of restaurant cost management in the comments section, below!