07 Apr The Art of Keeping Expenses Low and Profits High in the Restaurant Business (Demo)
The Art of Keeping Expenses Low and Profits High in the Restaurant Business The restaurant industry is in a constant state of ebb and flow. When prices fluctuate on your food and alcohol purveyor’s, and other service providers end, that difference in cost is transferred to you–the restaurant owner–and you reflect that in the prices offered to your customers. The problem, however, is that if you don’t keep up with this rapidly changing market, your restaurant could be left in the dust. So what’s the secret to keeping your restaurant expenses low and profits high? It’s all about being able to adapt and change your business along with the industry. Ask yourself these two questions to see if your restaurant is in need of some big changes to stay in the game.
Is Your Relationship with Your Food & Beverage Purveyors Symbiotic?
In the same sense, your relationship with your food and beverage suppliers needs to benefit both you and your supplier. If it’s not, it’s time to shop around for a new supplier. Let’s use beer prices as an example. Customers are fickle and are liable to drink elsewhere if you raise the price of your drafts by fifty cents or a dollar. So, I am sure you are very sensitive when your distributor informs you of the upcoming price hike for their product. In this situation, you need to take into account how this difference in price could affect your business and whether or not it will have a negative impact on the satisfaction of your customers. If you feel that it is in your business’s best interests to shop around for a new purveyor that offers a more favorable price, start shopping! It really doesn’t matter what expense we discuss, whether it’s your beer, liquor, food, or insurance policy. The fact is that it is your obligation to shop for prices for every product that your business needs. To keep expenses low and profits high, a restaurant owner needs to constantly balance quality products and reasonable prices in order to keep customers happy and coming back. If you haven’t reviewed your suppliers and what each one costs you lately, take some time to sit down and become reacquainted with this information, and be prepared to make the necessary changes.
When Is the Last Time You Reviewed Your Insurance Package?
The most obvious ongoing change in any business is the cost of operation, which not only includes overhead costs like electric bills and rent, but also your insurance policy. Ordinarily, restaurant owners have a “package” type of insurance for their business that covers just about everything, including liquor liability. The difference in premiums from company to company could be as much as $500 to thousands a year for the same coverage. Also, ask yourself, do you even have the right coverage for your situation? Too much coverage? Time and time again, we see operators fail to shop around for the best insurance premium for their business, and instead simply take the path of least resistance by keeping what is already in place. What’s worse is the seasoned operator who elects to pay too much for insurance because they feel a sense of loyalty to their insurance company. While there is something to be said for remaining loyal to companies, suppliers, and purveyors who treat you right and are willing to stick their necks out for you, this doesn’t apply in situations where your business is no longer benefitting. If your restaurant could save $10,000 over ten years on your insurance premium by changing providers, by all means, do so.
Need Help Getting into the Pittsburgh Restaurant Business?
We can help! Aspiring restaurant owners have been coming to us since 1986 for help breaking into (and getting out of) the bar and restaurant industry. With over 80 years of cumulative experience in the bar and restaurant industry, Specialty Group has a strong understanding of the challenges and obstacles that new operators may face, and we’re happy to help you at every turn. Feel free to contact us online or give us a call at (413) 369-1555 for more information or to set up a consultation with one of our experienced and licensed professionals.