Are your most popular items actually making you money? The only way to know is to do a line-by-line breakdown.
One Northern Beaches cafe was renowned for its tandoori chicken burger. But despite the popularity of this menu favourite, the cafe itself was struggling to make money. Eventually the owners conducted a line-by-line breakdown of their costs. This of course included the costs of making that burger, down to each ingredient.
They soon realised the business was losing money on every burger.
“The owner basically revolutionised the menu, giving them a better yield. And it worked like a treat. It changed the dynamics of the business,” David Koch, TV personality and owner of Kochie’s Business Builders told a recent webinar hosted by Deputy.
Mr Koch used the anecdote to deliver an important message to business owners: it’s always worth taking a detailed look at costs.
The impact of inflation
In fact, taking a deep dive into expenses is more important now than ever. Inflation is at its highest level since 1990, and hospitality businesses are feeling the pinch.
The October 2022 Consumer Price Index saw the price of food and non-alcoholic beverages increase by 9 per cent in the past year. Alcohol and tobacco was up 4 per cent while transport increased 9.2 per cent furnishings, household equipment and services by 7.7 per cent.
Wages are also soaring, with private sector wages up 2.7 per cent over the year to June quarter 2022 — the highest seasonally adjusted rate of growth for the sector since September 2013. This is a particularly critical issue for hospitality businesses, half of which are finding it difficult to find suitable staff. Workers are working longer and harder as a result.
Going line-by-line
Koch’s advice is to go line-by-line when looking at expenses, examining everything from staff and supplies to what you’re offering on your menu and the margins you’re making.
“A lot of people go ‘I’ll extend my payments to suppliers or cut staff’. It’s about going a lot further than that, towards making your menu higher yield, considering the drinks you offer or maybe cutting back on the range to make it more efficient,” he suggests.
If reducing costs is a priority for your business, consider how a scheduling tool can help you create schedules that actually save you money. Keep labour costs low by comparing wages to sales data in real-time, and easily adjust your staffing to maintain a healthy labour percentage.
Deputy’s award-winning app can save you admin hours and help you create efficient schedules, try our free Scheduling ROI Calculator to see how much money you could save.
Don’t let inflationary pressures and tedious manual scheduling impact your bottom line. Start your free trial today and keep your labour costs low and your margins healthy.
