In ideal operations, input costs are aligned with revenue and demand to minimise wastage and ensure customers receive the expected experience level. Unfortunately, the food and beverage industries haven’t operated in ideal situations. According to UKHospitality (principal hotel and hospitality membership organisation), hospitality business costs are rising between 11% and 13%.

Supply chain problems from logistical challenges and demand for higher wages are raising hospitality venues’ operating costs. The inflation rate isn’t helping matters, and venue owners have to purchase luxurious food and beverages at higher rates. Luckily, you can control the operating costs of your food and beverage business with the following tips.

How to Keep Your Operating Costs in Check

Before identifying ways to reduce your costs, you need to track your expenses. Where is the bulk of the fixed and variable costs? When you identify where you spend most of the business costs, you can find ways to minimise them. You should use a point-of-sale system to track your revenue or expenses and make data-driven decisions.

1. Manage your labour costs

In hospitality venues, labour costs are the largest operating expense at 40%, while in fast food chains, it is 25%. Post pandemic, many workers did not return, causing a shortage of workers and further increasing labour costs. While you cannot lower your workers’ wages, you should find creative ways to maximise the current workforce. For instance, you need to effectively schedule workers to ensure the working hours match the hotel’s demands. Cross-training also ensures workers can take up different roles and allows you to optimise your staffing resources.

2. Reduce utility costs

With energy prices increasing by over 95%, the hospitality sector is struggling to keep the costs under control. According to UKHospitality, 76% of food and beverage businesses are minimising gas and electricity usage to keep the costs low, while 38% are limiting their trading hours. Since utility takes up 6% of the operating expenses, you need creative ways to slash costs. For instance, you can install energy-efficient bulbs and occupancy sensors to ensure lights are off when guests leave. Since faulty HVAC systems increase energy consumption by 15%, staying on top of maintenance can lower energy bills.

3. Rethink your software stack

How much software does your hotel use? If you have separate software for every department, the costs can skyrocket. For instance, if you use five different software from different providers, you have to pay bills for each software. Conduct a software audit to discover underused software. You should also find a restaurant POS system that can bundle multiple functionalities into a single suite.

4. Reassess your marketing expenses

The customer acquisition cost is a significant variable expense that can cripple food and beverage businesses. You should increase bookings at the lowest acquisition costs. For instance, you can minimise advertising fees by getting commission-free bookings through website optimisation, using social media and search engine ads.

Cost vs Experience

When cutting back all costs, you should weigh the impact of each strategy on your customer service. Anything that negatively affects your customer experience and leads to a dip in service or quality should be avoided. 

We are here to help your restaurant or hotel and improve your business outcomes. Call us at 1800 778 340 or email [email protected].