Due to our fast-paced and social lifestyle, an increasing amount of Americans and Canadians are choosing to surpass the grocery store and are opting to dine at restaurants instead. Thanks in part to increasing diversity and choice, it is now possible to eat the cuisine from a different country every night without venturing outside of your city. As a result, Canadians spent more than $57.5 billion CDN on restaurants in 2015, while Americans also spent more than $55 billion USD on dining out.
According to data released last year, restaurant spending in the US during 2015 outpaced grocery store expenditures for the first time.
“Millennials view dining out as a social event (i.e. a chance to connect),” notes the National Restaurant Association on their website. “Their diversity and interest in new things draw them to more ethnic restaurants too.”
With the number of frequent restaurant goers steadily increasing each year, it’s not surprising to find that there is also an increase in the amount of people who want to open a restaurant or eatery.
While most who foray into the business are quick to learn that, aside from a delicious, unique menu and prime location, managing costs is the most important element in ensuring a restaurant not only survives the heavily saturated market, but also goes on to thrive.
Effectively managing costs is crucial for long-term success because expensive ingredients or very small orders from suppliers can significantly drive up the cost of producing each plate a restaurant serves, which eats away at the restaurant’s profits and bottom line.
Each new restaurant endeavor should start with a business plan that contains a careful cost analysis. This not only helps lenders understand how you’ll reach your target profits, but it also helps you predict, prepare for and oversee your own costs and keep track of what you’re spending to create the menu.
Restaurant Engine contributor and business plan writer Jessica Oman, advises restaurant owners get detailed supply contracts. “Suppliers will change their wholesale prices from time to time, and the more you can hedge against that, the better,” she writes. “If you get a good price on an ingredient you use a lot of, you might consider locking that price in for a couple of years.”
Experts also recommend investing in a computerized operations system, which can assist in the managing and tracking of sales, inventory, staff and reservations. The latest software can even help an owner understand which dishes are most popular and least popular, which can lead to more informed purchasing practices.
Toronto-based executive chef Kanida Chey has more than 25 years of experience serving food and managing restaurants in Toronto. Currently, Chey is the executive chef and co-owner of Branca, an Argentinian inspired restaurant he founded with his long-time friend.
Chef Kanida Chey knew when he and his friend and business partner opened Branca that cost analysis and management would be as important as the traditional Argentinian cuisine the restaurant serves.
“It [cost analysis] has really inspired us to get creative at Branca, said Chey. “We decided early on to source locally and that has helped us to keep cost down, while also getting the best, quality ingredients.”
Finally, all restaurant owners and chefs were unanimous when it comes to resisting the urge to over purchase. Having a well-planned menu with a limited number of options will ensure the money you spend on food doesn’t get thrown in the garbage.