This story previously appeared in our sister publication, Pizza Today.
Key Points:
- Restaurant profits come from small, consistent cost controls rather than busy nights, such as pre-bagging cheese portions, auditing labor against the schedule daily and logging comps and voids in detail.
- Renegotiate vendor and credit card processing deals each year, cut menu items that sell under 10% of their category, and drop marketing that doesn’t pay off to turn hidden leaks into real profit.
- It doesn’t matter how great you golf with the big swings. What moves the needle is the small putts.
Identify and fix unnecessary expenses that are draining your profits
Everybody loves the drive that clears the fairway. In a restaurant, that drive is the big night. The line out the door. The POS tickets are piling up, and as the owner, you feel like bragging about how the place is so busy, even though you don’t know for sure if you’re doing anything more than just breaking even. I get it. I’ve been that owner. All the while, you know if a refrigerator goes down (see page 12) or you’ve got an insurance problem to handle, you’re actually going to lose money that month.
That’s why being a little heavy on cheese, a little loose on the schedule, skipping the negotiation or not taking the vendor up on a rebate is how you really do lose. Screw up a few of those small things left or right, and the round goes sideways. None of them feel dramatic in the moment. Stack them for a year, and you’re staring at hidden money that could turn a restaurant doing OK into a solid, money-producing profit machine.
One more thing before we get tactical: You can’t save your way to prosperity. But savings still matter in a low-margin business. If you’re a 10% profit business and you save $10, that’s like ringing a $100 catering order. Save $100, and it’s like getting a free $1,000 catering order. So, we do need to be super mindful of costs without cutting off our nose to spite our face.
Killing the profit leaks is not about investing in some amazing marketing program that never comes to fruition. It’s about treating every single small action like the little putts you need to get to the hole.
Make Profit Happen With Small Moves
For us at Andolini’s, it seemed like we were doing everything right with cheese. Because it’s so expensive, we were more off than we realized once we started pre-bagging everything. By having portions pre-bagged, we took the eyeball out of the situation. We also got faster on the line. Little things like that are incremental wins, and they stack up big time in this industry.
Same story when a void just said, “angry guest” and provided no details. You really can’t do much with that. When we forced more detail (burned pie, wrong build, guest Simpson sent it back), we could train it out better. Count staff meals and re-fires before you accuse the line of theft. A few points of food cost on real volume is not a rounding error. It’s real money.
Gaming Your Labor Variance Report
Labor leaks rarely look like one giant mistake. They look like Joe was scheduled from 9 a.m. to 3 p.m. and ended up working from 8:30 a.m. to 3:37 p.m. Cute once. Expensive when 10 people do it for two weeks.
Game your labor variance report on purpose. Daily payroll audits, not payday panic. Clock-ins against the schedule. Manager codes that aren’t floating around the floor like candy. If you only look at labor when checks print, you’re auditing a crime scene after the money left.
A little better on labor is not “cut hours and hope morale survives.” It’s matching bodies to tickets. Cross-training so you’re not paying panic overtime. Paying for performance instead of freezing raises and acting shocked when the building gets quiet.
Establish Partners and Monetize Vendor Relationships
A negotiation here or there is a putt most owners never take.
Ask once per year minimum: Is this still the best price, or is there a smarter deal if we lock volume? Flour. Cheese. Laundry. Insurance. Phone. Rebates you forgot existed because nobody asked. Don’t short the guest on quality to save a nickel. Renegotiate the back end. Cutting quality is how you cut off your nose to spite your face.
Credit card processing belongs in the same conversation. Slightly better rates. Slightly cleaner fees. Slightly less laziness about reviewing the statement. On real volume, “slightly” can turn into big-time cashola. The devil is absolutely in the details, and when you, as an owner, obsess about the Saturday night rush instead of monetizing the small things, that’s when you and we lose.
Dead menu items leak, too. If something sells less than 10% of its category, remove it. A salad that does less than 10% of your salads shouldn’t stay on the board out of soft-spot loyalty. Less waste. Easier, faster make line. That turns into profit.
We use the same filter on marketing that never returns. Kill the monthly charge with no proof. Keep what plants seeds. My filter: Will this return about five times in revenue I wouldn’t have seen otherwise, after food and labor? If yes, keep it. If no, move the dollars.
If you can act on each one of those, there is no way you’re not in a better cash position.
Get Your Money Back on Your Terms
Knowledge without action doesn’t matter. It’s just a data point.
So, choose what you’re going to do with these five opportunities. Cheese portioning. Schedule variance. Comps and voids. Vendor and processing. Removing items that sell less than 10% of their category. Put a name next to each. Check them every week for 90 days while the week is still warm.
You should walk into your numbers the way you walk into your dining room and notice a light out without looking up. Food cost drifted. Labor didn’t match the schedule. One server’s comps look weird. Cheese price moved even though the cheese price didn’t move. It’s when you’re looking at little things like that and being aware of them – and also looking at the data – that you’re really leaning into being a proper owner.
I learned the hard version of this years ago. I’d have great sales weeks and still get declined at a gas station because I didn’t understand cash flow. Revenue without protocols is a costume. Busy nights feel like winning. The putts are what keep you open.
Bringing It All Together
A little better on labor. A few points on food cost. A negotiation that gets you a few thousand dollars here. A rebate there. And now you went from being at break-even to potentially an extra $100,000 on a million-dollar store done right. I’m not trying to oversell it. I’m saying that because I’ve seen it happen.
All this happens when you stop romanticizing the big hit. Kill the profit leaks and keep the money you already earned.
MIKE BAUSCH is the owner of Andolini’s Pizzeria.
