by Jim Sullivan Copyright Sullivision.com
The hospitality business is one of the few industries I know where there are more ways to lose money than make money. There’s an old joke that’s sad, but true, about the industry: How do you make a small fortune in the restaurant business? You start with a large one.
At a pre-tax profit margin of less than a nickel on the dollar, controlling costs becomes a critical issue for us everyday, no matter what kind of operation you run.
And while I’ve managed a few spreadsheets in my life, I admit that I’m no expert on the Uniform System of Accounts. (I thought General Ledger was a WW II hero.) But I draw comfort from the fact that—like me– there are three kinds of people in the world. Those who can count and those who can’t.
So let’s start at Square One: All money is not equal. For instance, $100 in sales is a hundred dollars less expenses and taxes. A $100 in savings is $100. So saving money—while it doesn’t supplant the importance of making sales– absolutely contributes to profitability. If a new manager takes over a store that has been running a significant deficit and he or she consistently reduces that deficit, they’re being successful. Digging out of the hole is first necessary to lay the path to profitability.
Restaurant operators don’t go out of business because they run out of money, they go out of business because they spent their money on the wrong things. Focusing on what you make and where you spend are the twin baselines of profitability. So while making money is obviously critical, losing less money is just as important. And how do you lose less to make more? Not surprisingly, it adds up to a lot of little things.
Follow your recipes. A driving force behind high food costs in the kitchen or behind the bar result from cooks or bartenders who choose to follow their own recipes or measure “by eye” instead of using the prescribed spoons, cups, scales or shot pourers. This creates inconsistent portions, and the guest experience also becomes inconsistent.
Be careful carrying, stacking and washing all glasses and dishes. Servers and bussers should avoid picking up 4 or 5 water or wine glasses at once with their hands—the infamous “glass bouquets”. It’s short term smart because it seems to save time bussing tables, but it invariably causes chipped, cracked and dropped glassware. Dishwashers and bartenders should be carefully trained how to properly handle and clean glassware.
Keep knives and blades sharp. This minimizes the cost of cuts and accidents, saves kitchen hours, hedges rising insurance rates and gives you better yield.
Offer a 20% “Commission” to any employee for an idea they contribute that saves you money. Why not? Your employees talk about areas where you’re wasting money or creating unsafe conditions in your business every day. Why not have them share the insight and reward them with 20% of the money you saved? Respond promptly to all suggestions and post the best ideas for everyone to see. This helps eliminate multiple submission of the same idea and shows everybody that you take their ideas seriously.
Play the “Price is Right” at employee meetings (or orientation). At your next meeting (pre-shift or all-employee), display everyday workplace items that employees use or abuse (i.e. sugar packets, butter, crackers, silverware, napkins, plates, glasses, ramekins, table tents, menus, an extra ounce of meat, a handful of fries, etc.). Out these on a table in the front of the team with a card face down featuring the price of each item or portion. Employees in teams of two try to guess the right answers.
Post your monthly invoices for electricity, water, heat, gas, food, beverage, insurance, lease, on bulletin boards with the totals highlighted in yellow. Now employees can relate the cost of doing business to their own expenses at home.
Weigh, Count, Inspect and Verify Prices on all Deliveries. Don’t get lazy when checking in deliveries from vendors. Be routine and fastidious with each order.
Display “Breakage” Publicly. Every time an employee or customer breaks a glass or dish in your restaurant, don’t just throw it away anywhere, keep it in a specially-designated “breakage” bucket near the time clock that everyone can see when they clock out.
Offer a Free Pre-Shift meal for every employee. This strategy helps eliminate food theft during the shift.
Magnetic trashcan traps will catch most silverware before it’s accidentally tossed.
Buy our best-selling “Profit on the Dollar” poster. This effective 11×17 poster 
shows your team what the real profit on the dollar is and what expenses must get paid before we make any money. Get several for every restaurant to remind your teams that sometimes we run out of month before the end of our money. Available at our Sullivision.com store for as little as $1 each in bulk.
And finally, sell more of what you have. This may be your best cost-cutting strategy of all. Selling rotates perishables quicker, makes advertising more effective, saves labor faster, and makes the guest happier. And best of all? Selling doesn’t cost, it pays.
Jim Sullivan is a popular speaker at manager conferences worldwide. His free monthly e-newsletter and product catalog is available at Sullivision.com. Follow him on Twitter @Sullivision and get his FREE app of motivational quotes called QuoteZilla at Google Play or iTunes.
