Cut Costs, Not Profit

Cut Costs, Not Profit

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With unstable economic situation in the region, many restaurants are facing the greatest challenge of survival for the foreseeable future. Manal Syriani, shares four keys to survival in turbulent times.

Given the difficult economic climate, business owners are turning to cost reduction in order to maintain breakeven and sustain minimum profit margins. Such practices, however, risk generating damage to the concept and can easily translate into poor customer service if not managed wisely. Surviving smartly is what’s needed.

4 ways to survive:
Manage labor costs
Trimming back office staff alone will put pressure on service teams to complete reports and support tasks, which might affect the quality of the moments of truth with clients. Subsequently reducing front-line staff will certainly affect the quality of service. Therefore, any reduction in staff should be accompanied by a redesign of the internal processes in order to meet the best combination of multitasking that is most efficient to the specific restaurant operation.

Manage fixed costs
Management should also explore the possibility of rescheduling payments for fixed financial obligations, so as to maintain positive cashflow. Such tasks
could be accomplished by trading services where possible or consolidating
certain contracts to selected suppliers/providers.

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Manage menu engineering
Understanding your menu performance, consumers’ demands and your sales
margins will give you an insight into how to maximize your profitability.
Re-engineering recipes to use lowercost products without compromising on quality will play an important role in increasing your bottom line. On another note, menu choices could be reduced to capture the core of your concept.

Dare to diversify
While the economic downturn will likely lead to shrinking our client base, it is a fact that dining out remains a leisure activity enjoyed by many. Opening up to a new target clientele and a new generation will make a crucial difference to your bottom line.

hospitality-news-Manal-Syriani
Manal Syriani
Consultant

“Surviving smartly will require opening up to new target clientele and a new generation”

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