Lorri Mealey knows something about restaurants—her first job was working as a cashier at a small one in Western Maine.
That job gave her a taste for the business, so much so that she eventually became co-owner of three different restaurants.
Over the course of her career, she's become something of an expert about the challenges restaurant entrepreneurs face, one who's shared her knowledge in multiple articles, including those which outline the reasons some restaurants aren't successful.
It's about More Than Location
According to Mealey, location is as important as most restaurant owners think it is, but a bad location isn't the only reason about 60% of restaurants don't succeed in their first year.
There's also lackluster customer service, hiring the wrong people, failing to pay taxes and not having a sound marketing plan—but there's another reason, one that too many owners don't spend enough time thinking about: running out of money.
You see, as Mealey notes, it's important to stay on top of your finances like white on rice. If you don't, you could find yourself in serious trouble sooner rather than later:
"Cash is king, no matter what credit card companies would like you to believe. It is vital that restaurants (well, any business for that matter), keep a close eye on their cash flow. Make sure you have enough cash to cover big expenses, like food orders and payroll, every week, along with all the other bills that come with a restaurant. If your checking account starts running into the red, it is time to look for ways to save money at your restaurant."
A Penny Saved Is a Penny Earned
OK, that expression is a bit tired, but that doesn't make it any less true.
To be successful, you need to pay as much attention to cost-saving opportunities as you do to your menu and marketing. It can really pay off—for example, according to Energy Star, restaurants can save as much as 30% on their energy bills by simply switching to energy-efficient equipment.
Energy savings are important, of course, but they're not the only way to cut costs. In fact, here are six smart and simple strategies you can implement today to save money for your restaurant:
How to Save Money for Your Restaurant
1. Get Smart about Lighting
This is two-fold: First, you should only have lights on when you need them. There's no point to have your dining room lit during off hours.
Second, you can save a lot of money by switching to energy-efficient light bulbs, something Subway recently did at all its U.S. franchise locations.
How much can you save?
According to recent studies, you could save about $22 a year per light bulb with energy-efficient bulbs. So, say you have 100 bulbs. That's $2,200 a year that goes into your pocket, and not to the electric company.
Over 10 years, that's a savings of $22,000.
2. Don't Run the Dishwasher Until it's Full
This is a no-brainer. Running your restaurant's dishwasher costs money—for electricity, water, and soap. Therefore, wait until it's full before you start it.
You'll also be more efficient if you soak the dishes before they go into the dishwasher. Fill the sink and soak as many dishes as possible. This will loosen dirt and grease and put less pressure on the dishwasher.
Finally, you can save even more money if you install low-flow faucets (you should also consider these for toilets). This will cut your water usage by as much as 40 percent.
3. Nix the Plastic Cups
It's true that using disposable, plastic cups, plates and utensils will save you some money on dishwashing costs, but you'll save even more by switching from plastic to glass (it's also better for the environment).
You won't be paying out every week for these supplies, and you'll also save money on garbage hauling costs.
4. Invest in Energy-Efficient Appliances
Energy star appliances—like ovens and refrigerators—use far less energy and can save your restaurant thousands of dollars every year—money you can use for other purposes.
Although this can represent a significant one-time cost, many states offer tax credits and other incentives for switching to energy efficient appliances to help defray that cost. Through a combination of tax credits and energy savings, your more efficient equipment will in most cases pay for itself in one or two years.
5. Put Your Menu On a Diet
You can't try to offer every customer every food item he or she wants. Find out what items on your menu are big sellers and eliminate those which appeal to a small minority of your customers.
Keep in mind that many poor-selling items are likely to spoil before they ever get to the customer, another cost you can avoid by keeping your menu smart and trim.
6. Get Everyone In On the Act
Whatever cost-saving measures you put into place, it's important that you educate your workers about implementing those plans.
If you plan to save on lighting, for example, give all your workers explicit instructions on how to follow through.
Although some restaurant startups don't succeed, many do—they do so by putting as much emphasis on saving money as on making it. You can increase the odds of success by asking yourself, every day, "Is there a way I can do (fill in the blank) less expensively?"
So, use these tips to save money for your restaurant. Also, to learn more about our services and expertise in achieving energy savings for businesses like yours, contact us today for a free consultation.