Some costs are easy to see, like rent, staff salaries, and food ingredients. But there are also hidden costs that you might not even realize you are paying. These hidden costs can add up and take away a big part of your profits.
If you do not track these hidden costs, your restaurant expenses will keep increasing, and your profits will keep shrinking. Let’s look at some hidden costs you might be facing and how you can reduce them.
What Are the Hidden Costs?
Hidden costs are the extra expenses that you do not notice immediately. These costs do not appear clearly in your daily operations, but they affect your business in the long run. You might be spending a lot of money without even knowing it. Some of these costs come from food wastage, overpaying employees, manual cost calculations, and outdated systems. If you do not manage these properly, your profits will continue to drop.
1. Calculating Food Costs Incorrectly
Food is one of your biggest expenses, but are you aware of how much you are paying? Many restaurant owners do not track their food costs properly. They buy ingredients without checking how much they are using. As a result, a lot of food goes to waste. Food prices are rising every year, and if you are not careful, you could be spending too much without realizing it.
Studies show that restaurants waste about 20% of their food due to poor management. That means if you spend RM10,000 on food ingredients, you could be losing RM2,000 every month just from wastage. The best way to stop this is by using inventory management software. This software helps you track your stock, control your purchases, and reduce waste. If you are still relying on manual tracking, you are likely wasting money.
2. Overpaying Employees Without Tracking Performance
Labor costs are another major part of your restaurant expenses. But are you paying the right amount to the right employees? Many restaurant owners pay their staff without monitoring their actual performance. Some employees may not be working efficiently, but you still pay them the same as others. Without an employee management system, you cannot track attendance properly. You may be paying employees who often come late, leave early, or do not perform their tasks properly.
An employee management system helps you track attendance and monitor performance. This ensures that you only pay employees based on their actual work. If you are not using one, you are probably overpaying some of your staff without realizing it.
3. Mistakes in Calculating COGS
COGS (Cost of Goods Sold) is a very important calculation for your business. It tells you how much it costs to make each dish. If you calculate this wrongly, you will not know how much profit you are making. Many restaurant owners calculate COGS manually, which can lead to errors. Even small mistakes can result in big losses.
Using the right software can help you calculate COGS accurately. When you have the correct numbers, you can price your dishes properly and make sure you are making a profit. If you are not using software to calculate COGS, you might be underpricing or overpricing your dishes without realizing it.
4. Spending Too Much on Different Systems
Many restaurants use different software for different tasks. You might have one software for billing, another for reporting, and another for employee management. This means you are paying for multiple systems when you could be using just one.
An integrated system like EasyEat can help you reduce these costs. It combines all the important features into one software. You do not need to pay for separate systems. Instead, you save money and make your operations more efficient. If you are still using different software for different tasks, you are spending more than you need to.
5. High Costs of Printing Menus
Menus need to be updated regularly. If you are still using printed menus, you will need to reprint them every time there is a price change or a new dish. This costs money, and the more you update your menu, the more you spend on printing.
Switching to a digital menu can save you from these hidden costs. A digital menu allows you to update prices and items instantly without printing new menus. It also makes it easier for customers to see your menu on their phones or tablets. This small change can help you cut down unnecessary expenses in the long run.
6. Energy Wastage
Electricity and water bills are another hidden cost that many restaurant owners just like you, do not think about. If your kitchen appliances are outdated, they could be using more electricity than necessary. Air conditioning, refrigerators, and lighting can also contribute to high energy bills. A small business can spend up to RM5,000 per month on energy costs alone.
You can reduce this by using energy-efficient equipment and turning off appliances when they are not in use. Simple changes, like using LED lights and smart cooling systems, can help lower your monthly bills. If you use smart systems like EasyEat then you can monitor which of your tables are empty so that you can switch off the unnecessary appliances.
7. Licenses and Permits
Licenses and permits are necessary for running a restaurant, but they come with costs that can sometimes be unexpected. Whether it is a food handling license, alcohol permit, or business renewal fees, these expenses add up. If you do not plan for them, they can become a financial burden. In Malaysia, you know how important it is for your staff to get typhoid vaccinations. Make sure that you keep a copy of their vaccination certificate with you.
Keep track of your licenses and their renewal dates. Set a budget for these costs so that you are not surprised when payments are due.
8. Equipment Maintenance and Repairs
Your kitchen equipment, furniture, and other appliances need regular maintenance. If you do not take care of them, they might break down unexpectedly, and repairs can be expensive. Some restaurant owners ignore small problems until they become big issues. This can lead to sudden expenses that disrupt operations.
By scheduling regular maintenance, you can extend the life of your equipment and avoid costly repairs. It is better to spend a little on maintenance than to face a huge bill when something breaks down.
Many restaurant owners do not realize how much they are spending on hidden costs until it is too late. But with the right systems in place, you can take control of your expenses and run your business more efficiently.
Start identifying and cutting down on hidden costs today, and see the difference it makes in your profits!
