3 Reasons Restaurants Lose Money in Back-of-House Operations

News & Blog

High Turnover

Did you know that high turnover could be directly affecting your bottom line to the tune of as much as $5,864 per employee? With a 66.7% turnover rate in 2016, failing to retain employees could be costing you up to $146,600 per year. The hospitality industry experiences high turnover rates in large part to seasonality, but there are many practices you can implement to ensure that your restaurant--from fine dining to quick service--experiences less.

Improving your hiring processes is one sure-fire way to lengthen the relationship with your employees. And it’s not just about more stringent hiring practices, either. It’s about checking in on them throughout their employment. Some managers and owners will simply talk to an employee when he or she gets overwhelmed, but it may be too late to keep them by then.

Keeping employees engaged is essential to a motivated, happy workforce. Engagement doesn’t have to include happy hour after work or even a monetary incentive. For example, continued education for your staff can make them feel like they’re apart of the business. Try giving them samples whenever a new menu item is revealed, letting them vote which seasonal appetizer gets to be the new mainstay or giving away a coveted shift (or day off) to the person with the most sales in a competition. And don’t forget: great talent often knows other great talent. If your employees are happy, they’re more likely to tell a friend who may be a great fit. Give away cash bonuses to employees who refer someone who gets hired to strengthen your network of hard workers.

Lastly, hire better managers. It’s impossible to think that a team of great employees can be effective when poorly managed. And restaurant managers have to balance many tasks: ordering and inventory, customer satisfaction, employee management and more. To find better managers, search for people who are proactive, innovative problem solvers and are looking to take things above the status quo. Micromanaging won’t be necessary if you’re hiring appropriately, so your managers can focus on taking the business to the next level.

Poor Kitchen Management

Improving kitchen management is no easy feat, but by focusing on efficiency, you can streamline your kitchen’s functionality and processes in no time.

Firstly, focus on improving inventory management. We’ve all been there. It’s one hour into the dinner shift and half of the menu has been 86ed. The customers are complaining, the kitchen is confused and the wait staff is running around like chickens with their heads cut off. Managing your inventory is essential to keeping food quality and customer service high. Two tips include: make a plan and make it routine. When you make a plan, assign a particular person and tell them what is expected. Then put a process in place to ensure that the plan always delivers the most optimal results. Create a checklist that is done before each day or each shift and you’ll never be confused when something runs out.

For restaurants that fry, oil management can be a slippery and dangerous task. Fresh oil is essential to food quality and optimum taste, but also for efficiency and perfect cook times. But managing oil can be a very messy situation. At Restaurant Technologies, we’ve created an automated oil management process that takes the guesswork--and the risk--out of oil management.

The future of restaurants is in the data. In order to maximize all processes, you have to be willing to take a deep dive. And there’s never been an easier time in the restaurant industry to do it with the Internet of Things. In case you haven’t heard about IoT, it’s simply the interconnectivity of machines and being able to obtain data from the machines you utilize most. To figure out how it can make an impact on your restaurant and back-of-house operations, you can read more about it here.

Managing Costs 

The last reason restaurants often lose money on operations is they’re not carefully managing costs.

If you’re not already utilizing it, try the 30% rule of food cost and pricing. The cost of food should cost 30% at which you’re pricing the dish. So if it costs $5 to put the food on the plate, it should be about a $16.50 item.

Streamline your scheduling and payroll overhead. Try to minimize redundancies in the schedule. For example, if a hostess’s duty includes rolling silverware and she comes in early to do so, see if the dishwasher, who’s already there for preparation, can add that to his list. If there are several people standing around after a shift with little to do, try combining tasks and assigning to a specific individual each night. Additionally, ensure that your payroll makes sense for managers, kitchen staff, wait staff and owners.

That brings us to our last point: if you want your restaurant to be a success, ownership requires real work. If you expect to sit at the bar drinking your best bourbon all night, don’t expect your team to function on all cylinders. Owners who routinely show up and roll up their sleeves not only have the best teams, but the best output and most innovative solutions to saving.

It might seem daunting to implement all of these changes to your establishment, but we guarantee that you’ll not only see savings on your bottom line, you’ll have a deeper understanding of how your restaurant and team function and be better equipped to tackle any challenge that arises.