How to Identify and Reduce Controllable Costs

If you’re struggling with your budget, you’re not alone.

Restaurants operate on razor-thin margins. Owners, operators, and managers are constantly reevaluating their inventory purchasing strategy and menu pricing strategy to offset operational costs throughout the business. 

Some of these operational costs are uncontrollable – like rent increases, third-party delivery, or minimum wage increases – while some are entirely controllable.

As the name suggests, a controllable cost is an operational expenditure that can be reduced with some analysis, strategic thinking, and an overall proactive approach. It's critical that you take control of these controllable restaurant costs.

Here are six ways restaurant owners, operators, and managers can wrangle and reduce controllable costs.

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Restaurant Controllable Costs Worth Re-Examining

Late fees, tickets, and fines 

Fees are a classic example of drops in a bucket – one might not seem like a lot, but  fees can add up and deplete the budget for other areas of the business quickly. Some examples of fees you may encounter as a restaurant owner or operator are: 

• License and permit-related late fees

• Parking tickets for a restaurant van or delivery vehicle

• Loan payments

• Late fees stemming from a water, gas, or internet bill

• Noise complaints

• Fines for over-serving patrons

• Fines related to health code violations

You can tackle and potentially do away with fees altogether with a little organization, judicious planning, and staff training. Payments that result from poor business practices – like over-serving patrons or noise violations – can be avoided by staying compliant with local law, you just need to make sure everyone on staff knows, and follows, all the rules. 

Based on your list of potential or recurring restaurant fees and tickets, enter any recurring fee due dates in your calendar and schedule reminders that let you know when bills are due, to stay ahead of them. A few minutes of planning can save you hundreds of dollars.

Shop around to lower your electricity costs

Electricity is a major hidden restaurant expense. While you might be able to limit some wasteful habits and appliances, switching to a cheaper supplier is the easiest way to save. Many states allow you to shop around.

Making this change will require that you make a hefty one-time time investment to research and do your homework, but it could save you as much as 10% of your energy costs. Say, for example, your  monthly restaurant electricity bill is $1,000; you could be saving $1,200 annually by reevaluating your electricity provider.

If electricity is a big cost for your restaurant, it’s also worth considering ways to manipulate the light in your space through conscious restaurant design. The right wall colors, counter surface materials, windows, and positioning of lamps and overhead lights throughout your space can maximize the amount of light without increasing costs.

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Invest in smart restaurant technology

High-tech solutions to old-fashioned problems – like theft and heating and cooling – are getting ever-cheaper and easier to deal with.

While limiting electricity usage can be hard, one exception is installing a smart thermostat like such as Ecobee or Nest that allows you to track  temperatures, schedule heating and cooling times, and make necessary adjustments from your phone or computer. Electric thermostats help you spend way less on electricity while maintaining staff and customer happiness. 

Similarly, now may be a great time to invest in a smart video camera. Be upfront with your employees about where the cameras are — you don’t want them to feel that you’re spying on them. You do, though, want them to feel that you’re keeping a careful watch on what’s going on in your restaurant. And that’s going to be easy to do when you can peek at the footage at any time or place from your phone.

On top of preventing theft, the cameras also help with disputes between customers and staff, or between employees. A quick look at the footage can remove the confusion from potentially costly disputes and legal action.

Eliminate early clock-ins

Making sure you monitor employee hours with the aim to eliminate early clock-ins is not about nickel-and-diming anyone: It’s about making sure you treat all your employees fairly – without allowing anyone to indulge in a loophole that can breed resentment and take money out of another employee’s paycheck. 

It will also help you predict and plan for your labor costs; proactive action could mean big savings. The “early clock-in” loophole can easily cost a restaurant over $500 per employee in a year. Say, for example, an employee regularly clocks in 12 minutes before their shift begins: If you pay $15/hour, that’s $3 a day – or $15 per week – $780 per year. 

So how do you eliminate early clock-ins in your restaurant? Invest in a labor scheduling and employee management tool – like 7Shifts or Homebase, both of which have free options, depending on the size of your restaurant(s) – that integrates with your restaurant point of sale. The best point of sale solutions will have a clock-in enforcement feature that prevents staff from clocking in before their shift starts. Often times, you can configure this setting to prevent clock-ins 20, 15, 10, or even 5 minutes before a shift starts. 

Restaurant scheduling tools have many benefits: They save your data so you can learn which shift models work best, they allow you to input individual employee preferences (second jobs, requested time off) so that shifts are easier to schedule and more likely to work out, and, if they’re cloud-based, employees can view their schedules from home and pick up and drop shifts at their leisure.

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Reduce Food Waste with Proper Back of House Management 

Food costs are one of the top controllable costs in your restaurant. You should be consistently analyzing and negotiating with vendors to ensure you’re getting the best price possible. Did you know some vendors price differently per location? You could be spending big bucks on an inventory item at location A, but have it under control at location B. 

Along with vendor relationship management, teach the back of house – specifically your prep cooks – cutting and prepping techniques that keep food items fresher for longer, and maximize the amount of product that is going onto plates rather than into a compost bin or landfill.

Conduct maintenance regularly 

Unsubscribe from the "If it ain't broke, don't fix it" mentality. 

What could be worse than an unexpected issue that takes down your fridge on a Friday at 3:27pm? 

You can reduce the risk of unexpected restaurant equipment failure by conducting maintenance regularly, which will help you catch problems before they become big, expensive, and date-night-destroying. Some equipment providers offer yearly maintenance packages.  Yearly maintenance plans tend to operate at the local level, so you’ll have to do a little research to see what’s available in your area.  

As a bonus, in the event that something does go wrong, you’ll know exactly who to call and know that a person who already knows your equipment should be able to solve the problem quickly. Plus, the plan will likely cover much of the cost.  Think of yearly maintenance as insurance on your restaurant equipment: one-time investment that you’ll be thankful you paid that one time things go awry.

Save on printing, paper, and headaches with kitchen display screens. 

You can reduce – or eliminate outright – a need for kitchen printer paper by investing in   investing in kitchen display screens. Restaurants that have a point of sale system with integrated kitchen display screen (KDS) technology reduce ticket time, human error, and the need for paper tickets. As soon as your guest orders, their ticket is sent directly to the KDS, allowing the line to start preparing items seconds later.

Not only will this upgrade make for smoother front and back of house communication and faster ticket and table turn times, but it will save you on printing and paper costs. In 2017, the Toast community saved 2,500 trees by adopting KDS into their back of house operations. 

Get Your Costs Under Control 

These tips aren’t a set of magic fixes, and controllable costs will differ from restaurant to restaurant.  Where food costs may be a top concern for some, electricity may be in the top spot for others. 

It’s important to focus on ways to reduce overhead in your restaurant by taking a proactive approach to optimizing controllable costs. 

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