Two-thirds of restaurant operators say they are having to increase menu prices to offset rising staff and inventory costs, according to Oracle’s new study, Cost Control in Food & Beverage. Thirty-eight (38%) percent say they will be raising prices in the next six months.
Bogged down in labour and inventory
Labour and inventory are the two biggest costs on nearly every food and beverage operator’s budget. Restaurant operators report they spend more than 50% of their revenues in these two areas.
While respondents resoundingly rank recruitment, training and retention as top priorities when it comes to staff, managers are clearly spending much of their time mired in administration: 63% change worker schedules prior to posting them and 49% do so after posting. The time and effort spent on scheduling is often falling short; 44% of respondents reported that understaffing is an issue for their business, which can have a negative impact on the dining experience for guests.
Similarly, one third (32%) of restaurant operators spend three hours or more managing stock each week even though their top priorities for inventory lie in meal quality and kitchen staff empowerment. 68% of respondents report food consistency and quality is their top inventory concern.
Brett Smith, Senior Director in Food & Beverage Solutions at Oracle Hospitality says: “Increasing prices to offset expenses is unsustainable in the long term. Customers want convenience and quality at the right price and will look elsewhere if they feel a food and beverage provider is not delivering on that expectation. Gaining cost and time-efficiencies in labor and inventory management is crucial to keeping menu prices in-check, and new cloud- based platforms that automate many of these processes are making this possible.”
Some restaurant operators are addressing their labour management issues by allowing staff to manage their own schedules using their personal mobile devices. Half of the respondents plan to pursue this strategy, and among those, 51% plan to do so in the next six months.
A wasted opportunity
Over-portioning and food waste are also major contributors to cost inefficiencies, standing out as the two biggest factors for product loss among the businesses surveyed. Thirty-two (32%) percent of restaurant operators cite over-portioning as the biggest culprit and 30% cite waste.
Despite these concerns, 50% of respondents admit they do not track prepared waste. Fewer than half use modern forecasting systems designed to deliver more accurate ordering and reduced waste, in addition to automated stock management.
Smith added: “Failing to track prepared waste is akin to ignoring the fact that money is falling out of your wallet, and it’s a surprise that restaurants of all types are not doing more to address the issue. Encouragingly, the majority of those who do track waste have a system in place that is integrated with their point-of-sale. This is the easiest way to monitor how much money they are hemorrhaging so they can address the problem more proactively.”
Scott Drago, Director of Operations, at Blue on Highland said: “In order to have multiple locations, you need to have reporting consistency and accuracy. Theft, over portioning, under portioning, usage variance, labour…these are all things that must be managed. One of the most important things in this business is food cost- you need to manage it in order to make your bottom line; from the second the customer walks in the door, you need to control the process behind how things are brought to the table. Having a user friendly and integrated reporting solution that could track these, was very important to us and is why we chose Oracle Hospitality.”