How to cut your F&B Operations Costs Effectively
As an F&B business owner, you would be constantly finding ways to figure out how to make the most amount of profit while maintaining the same services to provide to your customers. One way is to find out how to cut your operation costs in creating a higher profit margin
How exactly should you do that? Here are some tips you can follow to cut your costs effectively.
1. Recalculating food costs
Ingredients are the main factors in your food business. The things you would need to consider are primarily the cost of sourcing them and the inventory you keep in store. Inventory is important for the business to continue running smoothly but knowing how much to store is also important to note.
Keeping too much inventory would be a waste if it wasn’t fully utilized for the business, causing added costs, and wasted materials. It would be an even bigger issue if the costs of those ingredients were high, as more money would have been used to cover the costs of the wasted ingredients.
The key to solving this problem would be to evaluate how much of each dish is sold per week, to stock up on an appropriate amount of ingredients that would be completely used by the end of each week.
Sourcing for cheaper ingredients would also help reduce costs. This would make the Cost of Goods Sold lower, resulting in a higher gross profit amount.
Food costs are ideally between 15% to 30% of the price you are charging your customers, which leaves your gross profit amounting between 70% to 85%. However, do keep in mind this is not your final profit!
Consider reducing your food portions as well – many restaurants tend to overserve their portions, which results in high food waste.
While this doesn’t seem to sound like it affects the business, imagine the number of ingredients used in that dish that was thrown out that could have been used for the next dish.
Optimizing your menu to only serve a selected variety of dishes would also help lower costs. Monitor your sales for a period and pick out the dishes that don’t sell as well as others.
This allows you to fully focus on selling a smaller menu and reduces costs for purchasing more different ingredients and encourages buying the ingredients in bulk for a lower price.
2. Reducing Your F&B Business Expenses
Running a food business would incur other costs to keep the business running, including labour and overheads. If not planned appropriately, you could rake up a big amount to spend on merely expenses.
One way to reduce labour costs is to hire fewer workers and train the current workers for more responsibilities and higher positions with a raise in salary.
Introducing technology in your F&B operation systems would help too, by reducing the need for human operations – for example, in inventory management, online reservation systems, order systems, and more.
In particular, the ordering systems can show when you have the most orders in a day, so you can efficiently put more, or less staff to work in specific periods.
Overheads can come up to a high amount and take up most of your gross profit, lowering the final net profit amount you would gain in the business.
Utilities, rentals, and more would eventually catch up if minimum sales are not achieved every month. To combat this, why not consider operating through a cloud kitchen?
Cloud kitchens are ideal for businesses who wish to run on a smaller scale, delivery-only basis. It allows food businesses to solely focus on preparing food for customers rather than the service segment.
Costs would be cut significantly as overheads would be reduced to only paying for rental space, labour costs for fewer employees and other miscellaneous fees to keep the business running.
Delivery-only food businesses are also gaining popularity due to the surge of people preferring to stay home rather than go out to dine in.
It’s also expected that in a few years, a large sum of revenue would come in from delivery orders rather than dine-in orders.
If you’re considering running your food business through a cloud kitchen instead, why not run with kEATchen? Here, we provide a space for you to prepare your food while we handle the rest. There’s no need to worry about the extra costs anymore!
If you’re interested and would like to find out more, visit us on https://keatchen.my. We hope to see you grow with us!
As an F&B business owner, you would be constantly finding ways to figure out how to make the most amount of profit while maintaining the same services to provide to your customers. One way is to find out how to cut your operation costs in creating a higher profit margin…