QSR tapped the best minds in the business to come up with a realistic list of ways operators could save thousands of dollars in less than one year. There’s no advanced logic or restaurant expertise needed—just a willingness to try new systems or make a few adjustments to existing protocols. From the bathroom to tax forms, QSR found the easiest ways operators can immediately boost the bottom line.
1. Workman’s Comp
Savings: $150 a month
One great hidden gem in an operator’s budget is workman’s compensation insurance, says Dan Simons, principal at Vucurevich-Simons Advisory Group. Although restaurateurs cannot forgo the cost all together, they can easily reduce it.
Workman’s compensation is figured annually based on a forecast of the upcoming year’s labor costs. When the economy slows and crew sizes are reduced, often that insurance figure is not recalculated. Furthermore, when insurers go to resign a business for another year, operators often do not update their labor figures. As a result, workman’s compensation insurance is often based on outdated and inflated labor figures.
Savvy operators will update those figures regularly with insurance providers and receive rebates immediately rather than waiting until the end of the year.
Savings: up to 6 percent of sales
When you talk to restaurateurs about shrink, most of them don’t even know what that is,” Simons says. “It’s a sure thing that if a restaurateur isn’t actively managing loss prevention, they’re losing money—totally 100 percent guaranteed.”
According to Simons, the best way to prevent theft is to watch the back door. Operators can catch both intentional theft and waste, which Simons categorizes as unintentional theft, by simply using clear trash bags and performing trash audits.
“It’s not waste, it’s theft,” he says. “We bought the product and you threw it away when it wasn’t yours to throw away.”
Employees often smuggle goods in trash bags that are taken out to the dumpsters then steal the hidden products once they are out of the building. Other popular concealers include cardboard boxes and backpacks. Simons advises operators to breakdown all boxes before they are taken to the dumpster to prevent employees using them for smuggling and to not allow employees to bring duffel bags or backpacks into work.
“Trust is not a lost prevention strategy,” he says.
Savings: 2–3 points of food cost
The general rule in the restaurant industry is that 20 percent of your menu represents 80 percent of your food budget. Ensuring that your top items aren’t cannibalizing more of your budget is essential.
The first step to getting your menu spending under control is to request a velocity report from your food vendor. Have the company give you a list outlining from the most expensive to the lowest-priced items. “Those top 15 percent are the ones you need to be going over with a fine-tooth comb,” Simons says.
Operators should follow those items in terms of frequency and price all the way to the back door, where all items should be weighted.
“If a driver has 10 clients that he drops off blocks of cheese to, and one owner doesn’t weigh them, you take a pound off each block, and you’re in the cheese business,” Simons says.
For operators overwhelmed by the thought of weighing every food item, Simons advises to at least ensure that all meat is weighed.
Savings: up to 10 percent of traditional build-out
McAlister’s Deli, known for its signature 4,000-square-foot stores, recently figured out how to save 10 percent in build-out costs by streamlining its kitchen and cutting seating.
Bill McClintock, the brand’s senior vice president of development, says leaving the décor inside the restaurant was extremely important, ensuring that customers still got the same dining experience in the new smaller stores. Where he saw savings, however, was the refrigerator.
Rather than relying solely on walk-ins, McAlister’s new kitchen relies heavily on reach-in freezers, eliminating the need for multiple large walk-in coolers.
Also, by cutting down on seating, operations costs like upkeep and rent are reduced. Not to mention that consumers extend the lunch daypart by coming in early or later to avoid the crowds in the smaller stores.
Savings: 10–25 percent of energy bill
The most common sources of energy waste are lighting, refrigeration, and the HVAC system. Matt Kim, director of product development at Prenova, an energy-management company, says nearly half of the energy reduction can be attributed to maintaining the corporate set point. Often franchisors recommend set temperature points and franchisees waste money by deviating from those suggested temperature points.
As a solution, Kim suggests not allowing employees to change the thermostat or to install a system that automatically prohibits temperature deviation.
Operators also often waste money by lighting rooms that can be lit naturally through sunlight. Installing dimmers in those rooms allows operators to maintain a constant brightness relative to how sunny it is outside.
Finally, Kim recommends seeing an afterhours delivery first-hand. According to him, operators are usually surprised that walk-in refrigerator doors are propped open for hours at a time while deliveries are being made.