Tired of your restaurant's shrinking profit margins? Any great businessman or woman knows one fact - when you spend less of your budget, that's more money in your pocket or in reserve for your business. But there lies a tricky dilemma: How can you keep your restaurant budget reasonable without impacting the quality of your restaurant's food or service? Here are 6 ways you can make your restaurant budget work for you so your expenses can drop and your profits can rise up.  

1. Track & Manage Inventory

Let's be honest - inventory tracking is a pain in the butt, but it's a sure-fire way to help you save money and control food costs. Why? Because the lower you get your food variance, the less food you waste and the lower your total cost of food becomes. Costs are measured, food is tracked, and you'll be on your way to smarter supply ordering & food portioning. It's easy to make mistakes when it comes to inventory tracking, but it's important to stop these mistakes before they happen. For example, buying in bulk is not always the smartest idea! It limits the amount of usable and available space in your walk-ins and back room. Plus, food is more likely to lose its freshness when you buy in bulk, which could result in dissatisfied customers and even more food waste. The solution is simple: order accurately, track what's coming in vs. what's going out, and you'll lower your variance and your food costs. This will free up some of the money in your restaurant's budget and save you plenty of headaches. Still trying to learn the best inventory practices? Check out this video on how to get started to restaurant inventory if you're new!

2. Cut Back on Overtime Pay

The new overtime law was not the best piece of news that restaurant owners received in the glorious year of 2016. The threshold was raised and now those making less than $47,500 are entitled to overtime pay when their workweek exceeds 40 hours. So, here are your options.

• First, you can bump up the base pay of your all-star salaried employees above the threshold. Not only does this show employee appreciation, it allows you to budget for this funding ahead of time, rather than adding a few hundred dollars here and there, which can totally mess up your labor budgeting.
• Second, you can cap hours at 40 for your employees who aren't necessarily all-stars. If you feel like you need that employee more than 40 hours a week, either plan for the overtime pay or see option #1.
• Third, you can hire more staff members so that your restaurant keeps the same amount of labor hours without fronting the overtime costs. However, it's best to avoid this option if possible. With larger staffs come more costs associated with training and turnover, meaning the effort could be entirely counterproductive.

This new rule doesn't have to be the worst thing for your restaurant's budget. Just remember to plan diligently so that you can work towards avoiding overtime costs where you can.

3. Work on Lowering Employee Turnover

Like I mentioned earlier, there are enormous costs when it comes to hiring a new restaurant staff member. The resources dedicated to training, the time it takes to interview a candidate and onboard them, and the effort given towards rehiring someone when that first employee doesn't work out add up to a lot - anywhere from 16-20% of that employee's annual salary. That means if that employee were only there for a few weeks or months, it may have been a waste of money to hire that person. This leaves your restaurant with two tasks: hiring more qualified individuals and keeping those people around for as long as you can.

• Hiring better talent means dedicating a little extra time in the short run for a more lucrative long run. Running aggressive hiring campaigns and holding out for a stellar candidate deter you from hiring a pair of shoes to fill the void in your back kitchen. Again, you can plan time in your schedule and money in your budget to be spent on hiring campaigns, but you can't always plan for an employee to up and quit one day or start slacking on their duties after a month.
• Keeping top talent around results in a lower employee turnover rate, which helps alleviate those costs associated with constantly losing and re-hiring staff. Plus, the longer your staff remains at your restaurant, the more efficiency your restaurant will see. Both of these are huge helps in trying to control your restaurant budget.

4. Always Be Number Crunching

It's tough to know what's causing budget problems if you don't keep track of your numbers! It's crucial to go over all of your costs and metrics at a regular cadence, including:

• Sales Reports
• Labor Reports
• Food Costs
• Overhead Costs

When you notice one of these areas drastically changes, you can easily pinpoint what the problem was. For example, maybe it was a busy holiday weekend, so your labor costs are higher than usual - that's understandable. But when your month's sales reports are down and food costs are up, you'll know something needs to change.

5. Markup Wisely

A bigger budget usually means a better budget, right? Needless to say, the funds for your budget come from the sale of food and beverage, so this means you need to find that ideal price point that keeps your budget solid but doesn't scare away customers with insanely high prices. The best way to do this is by marking up the right items to the right amount. A few years back, AOL Finance found that these items are where restaurants see the best markups.

• Non-Alcoholic Drinks - bump those soda prices all the way up!
• Wine - the average markup ranges between 200% and 600%.
• Pasta, pizza, and bread-based dishes - we all know dough isn't too expensive to make.

The article also noted that marking up the daily special is a smart way to pocket some extra profit due to its limited availability. Moving forward, aim to find that balance of keeping price-sensitive items reasonably priced while putting that extra markup on items where you can get away with it. This will be enormously beneficial to your restaurant budget.

6. Choose the Right Restaurant Technology

Restaurant technology is essential for all restaurants that want to thrive and rise above the competition. Add a line in your restaurant budget for tech that improves your ROI, efficiency, and restaurant operations. The right restaurant technology platform can even increase table turn times, which means more sales (which means more money in your budget). Modern point of sale systems also offer features that were unheard of in previous models, like integrated online ordering (which saves money) and sales reporting (which helps you identify your best and worst sellers, which helps you save money). If you're in need of a more profitable restaurant technology platform, click here to download a free Restaurant POS ROI Guide!