How to Stay on Top of Restaurant Food and Labor Costs in a Tightening Economy


In today’s economy, where financial belts are tightening, managing food and labor costs is critical for the survival and success of any restaurant. This article provides restaurant owners and managers with practical strategies to effectively control these expenses.

1. Smart Inventory Management

One of the first steps in controlling food costs is efficient inventory management. Implement a system that tracks inventory in real time and identifies patterns in food usage. This approach will help in ordering the right quantities, reducing waste, and preventing overstocking. Leveraging technology, such as inventory management software, can streamline this process and provide valuable insights.

2. Strategic Menu Planning

Adopting a menu that balances high and low-cost ingredients is key. Focus on creating dishes that maximize the use of ingredients bought in bulk or those with longer shelf lives. Seasonal menus can also be a cost-effective approach, as they utilize ingredients that are abundant and less expensive during specific times of the year.

3. Negotiate with Suppliers

Building strong relationships with suppliers is vital. Negotiate better deals or consider bulk purchasing to reduce costs. Exploring local suppliers can also lead to more competitive pricing and fresher ingredients, enhancing the quality of your offerings.

4. Optimize Labor Scheduling

Labor costs can be one of the most challenging expenses to manage. To optimize these costs, create a flexible labor schedule that aligns staff hours with the restaurant’s peak and off-peak periods. Investing in staff training ensures that employees are efficient, reducing the need for excessive manpower.

5. Leverage Technology for Efficiency

Incorporating technology, such as automated ordering systems or point-of-sale (POS) systems, can significantly improve efficiency. These tools help in managing orders more effectively, reducing errors, and providing data for better decision-making.

6. Regularly Review Costs and Performance

“Regularly analyzing your restaurant’s financial performance is crucial” says Jeremy Hood, founder of Restaurant Results Partners. Keep a close eye on the food and labor cost percentage of sales and make adjustments as needed. This ongoing review process helps identify areas where costs can be further reduced without compromising quality.

7. Engage Your Team

Involve your staff in cost-saving initiatives. They are often the ones who see day-to-day operations most closely and can offer valuable insights into where improvements can be made. Incentivize staff to come up with cost-saving ideas and reward those that contribute to reducing expenses.

8. Monitor Industry Trends

Stay informed about the latest trends in the restaurant industry. This knowledge can help in adapting your business model to be more cost-effective and relevant to the current market.


Managing food and labor costs in a tightening economy requires a strategic approach. By implementing these practical steps, restaurant owners and managers can navigate financial challenges more effectively, ensuring the longevity and success of their business. Remember, a penny saved is a penny earned, especially in the dynamic and competitive world of restaurants.

Francis Nwokike

Francis Nwokike is the Founder and Chief Editor of The Total Entrepreneurs. A Social Entrepreneur and experienced Disaster Manager. He loves researching and discussing business trends and providing startups with valuable insights into running a profitable business. He created TTE to share ideas and tips to help entrepreneurs run and grow their businesses.

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