Contents

 Negotiate your interest rate
 Do-it-yourself bookkeeping
 Do-it-yourself laundry
 Maintenance and prevention
 Advertising and promotion

Most operators focus on controlling costs in two main areas – food costs and labor costs (or, prime costs). While these are important aspects of your operation, they are by and large a function of total sales. It’s the other expenses – those not directly related to sales volumes – where savings can be achieved and profitability enhanced. Here are a few simple tips to help you maximize efficiencies:

Besides rent, energy costs represent the largest portion of overhead. Yet, there are easy ways to reduce consumption and control energy costs.

• Many restaurants turn equipment on in the morning and leave it running until closing – busy or not. Do an audit for wasted energy. Can units be set to standby during slower periods? Can certain parts be turned off? Post a schedule for firing up grills and fryers. These units only take 10 to 15 minutes to reach operating temperature.
• Retrofit your exhaust system with sensors. The cost will be recouped quickly in reduced energy consumption and costs. Most new exhaust systems feature built-in sensors that operate based on how much equipment is being used, and how much heat is generated.
• Explore the use of high-efficiency bulbs and lower-wattage bulbs in back-of-house and low-traffic areas. Motion sensors also reduce electricity consumption in certain areas, such as back alleys.
• Have your refrigeration coils cleaned frequently to dramatically reduce costs. Dirty ones are inefficient, as they must run longer and harder to cool properly.

Did you know?
Some local restaurant associations have negotiated favorable gas and electricity rates for members. Check with your local association for more information.

Credit card companies can charge operators 4% or 5% when restaurant customers pay by credit card. Many restaurant and merchant associations have negotiated better rates for members. Do some research and see if you can beat the posted rates.

While you may need an accountant for tax returns and year-end activities, you can do some basic bookkeeping in-house. With most accounting software programs, general ledger entries and payroll can be done quickly and easily.

Laundry linen and uniform costs can add up fast if you use an outside service. Take it in-house by purchasing a small washer and dryer.

Equipment repairs can be very costly – especially in older restaurants. Consider a preventive maintenance program with your supplier. By budgeting for one, you’ll avoid costly, unexpected repair bills. As an added bonus, well-maintained equipment will run more efficiently and help reduce utility costs.

Another way to reduce the cost of unexpected equipment breakdowns is to purchase “boiler” insurance. For as little as $500 per year, you can insure against breakdowns of compressors, furnaces and hot-water tanks. Ask your insurance carrier for details.

Most restaurants budget up to 5% of gross sales for advertising and promotion. It’s an important part of running a successful operation, so you don’t want to skimp in this area. But, you can save money by using the “contra” method of payment.

For example, rather than paying $3,000 to advertise with your local newspaper, offer $2,000 and the balance in gift certificates. The $1,000 in credits will actually cost you $300 in goods, resulting in a net saving of $700. This approach can also be used for services such as accounting and legal.