Rules for Coffee-shop

/Restaurant Cost Control

 Coffee outlet Control is essential as it allows you to identify the area of your
expenses and take corrective and preventive measures to keep a healthy ratio
between your expenses and finances.

Highly Effective Coffee-Shop Cost Control

Campaigns That You Should Be Employing

1. Tracking and Managing Inventory to Ensure Food Cost

Control
The first step of coffee shop price control is tracking and controlling your
inventory. It is essential to track the daily Stock-in and Stock-out and the actual
consumption throughout the day. Monitoring the Variance between the Ideal
Stock and actual physical stock will help you identify if too much wastage is
happening at your Outlet. A Variance between 3-5% is standard; however,
anything above that implies that too much wastage or even misappropriations
may be occurring at your Place.

The ideal way to monitor the inventory is by switching to proper software, smart

inventory control software will pop up when you exceed or shortfall, you only
order the items once they reach a certain re-order level and eliminate the risk
of over-ordering or under-ordering.

The inventory management system would also help you Forecast your exact
stock requirements, based on the stock consumption patterns of your
restaurant. This way you can reduce any undue wastage due to over-ordering.

2. Purchasing Raw Materials on Credit to Reduce Costs

You can control your Coffee shop costs by going for minimalist cash transactions
and conducting all your purchases through the company account on a credit
basis. Usually, the raw materials purchased in cash are less in quantity and can
turn out to be expensive as compared to when you are buying them in bulk.
Purchasing the raw materials on credit is a good idea as it allows you to run
your restaurant, generate revenue, and then pay off the credit for the money
made.

Consider the Credit Period before deciding your restaurant’s vendor. The Credit
Period is usually around 15-30 days but differs from vendor to vendor.
Remember to establish the ground rules of payment, ordering, and receiving.

Join a ‘Purchase Group’, if possible, to lower your restaurant costs. In a

Purchasing Group, because of the sheer number of buyers, the
suppliers often lower the prices. 

It is also a good idea to have an annual contract with the vendors. This would
not only help you bargain a better price with the vendor but also help in
maintaining consistency in the quality of the raw materials.

The operations of the Coffee shops /restaurant and their service providers are
critically dependent on each other, so it is imperative to maintain a positive and
healthy relationship with them. You must remember that while putting a certain
amount of pressure on the suppliers is necessary and unavoidable; your
Coffeeshop cost control targets will fail at the cost of a healthy relationship that
you may share with them.

3. Analyzing Stock Requirements Through Yield

Management
You can implement Coffeeshop Cost Control and reduce your Food Costs
significantly by merely giving attention to a slight detail that is often
overlooked, yet is just as critical, namely Yield Management. Yield
management is an integral part of food cost control as it gives you the idea of
how much quantity of raw materials would be used to prepare a particular
food / snacks item. The raw materials should be ordered and purchased keeping
the yield of the items in mind.

4. Controlling Wastage Through Portion Control

Overproduction and big portions are the signs of wastage which lead to
escalating cost of sale. You should have the tools to measure the portions and
rigorous processes to control the measure /size of the portion in order to control
the price. Correct container for the portion is also essential as the over-serving
of product can lead to higher food cost prices and wastage.
We suggest creating a tracking chart based on these parameters: -

 Order Returned by the Customer

 Inappropriate making in the outlet
 Usage of containers at outlet
Once you start measuring these parameters, you can take corrective actions
based on the results. For instance, if an order is being returned by the
customers, either you need to improve the taste and quality of the item, or
start reducing the portion size served. If production made inappropriate manner
you need to train your staff better or probably consider purchasing better
equipment.

5. Controlling Labor Costs by Reducing Employee

Turnover
Another tip for reducing your budget spent on labor and coffeeshop cost control
is lowering your employee turnover. The drive through industry witnesses one
of the highest employee turnover rates, reaching as high as 75% in some cases.

Hiring a staff member for a busy drive through outlet needs a lot of resources,
starting from conducting the interviews for recruiting them, and training them
appropriately. But in a case, if an employee leaves your restaurant in the initial
weeks only, all the resources that you had put in hiring the person goes waste.

So, while hiring new employees in your outlet, your primary focus should be on
quality hiring and on ensuring favorable conditions so that they stick around for
a longer time. Spend time in hiring and adequately assess the candidates’
profiles when hiring them.

Also, ensure that you provide a good pay structure, give recognition and
rewards to your company staff so that they may be motivated to continue
working at your establishments. This would help you bring down your labor
costs.

6. Automating the Manual Processes

Accepting and placing the orders, and billing has always been considered a
labor-intensive task. When done manually, it leaves scope for manual mistakes
and also consumes time. A smart POS system which automates the entire
ordering and billing procedure, right from automated Tablet Ordering to instant
billing, reduces the need for human resource required to perform these tasks.

Having a Coffeeshop and Fast-food outlet management system, which comes

with automated reporting will also reduce your dependency on manual labor to
a great extent which in turn will reduce your expense on the labor. As soon as
the order is placed in the POS, it gets instantly reflected on the back office dash
board in real-time. 

In addition to this, if the customer changes his order after placing it, all the
changes will get reflected in the KDS in real-time as well. All these will nullify
the need for the service

7. Evaluating Your Staff Performance to Increase Efficiency

Monitoring and measuring your staff performance is essential to identify the
areas where they are doing well and the areas where they could improve.

You can define Key Performance Indicators (KPI) for each staff based on the
jobs they perform. For instance, the KPI for an area supervisor can be keeping
the food costs under the standard percentage, say 30%. Similarly, for a server,
you can set the KPI of ensuring sales worth to some task amount per day.
These KPIs need to be created as per your business, and you need to analyze
the POS reports to set a benchmark.

The overall efficiency of your staff would improve and this would help you cut
down your labor costs.

8. Controlling Internal Thefts and Pilferage 

One of the significant areas where Coffeeshop /restaurants lose out on a lot of
money is internal thefts and pilferage. The lack of automation and reporting
often leads to rising costs. There are multiple ways internal thefts happen in
fast food outlets, and the company owners are not able to identify the point
where the thefts are occurring. For example, dishonest staff members can alter
the number of sales that happened on a particular day and pocket the billed
amount for themselves, or keep certain inventory items for themselves. One
way to control this is to assign roles and permissions for each activity and keep
a strict view of the daily reports.

A well-designed software could also fight the odds of theft and possibilities of

pilferage in your establishment. The Anti-theft module of a proper coffeeshop
POS helps you manage your staff activities, and checks on the loopholes
present in the operations of any Drive through or dine in.

9. Daily and Weekly Reporting to Keep Track of Coffeeshop

Costs
Another important tip that you have to follow is to keep a regular track of your
overall Coffeeshop business. Real-time reporting comes extremely handy in this
case. By keeping track of the numbers and through regular reporting, you would
be able to have an air-tight control over your business and identify the areas of
revenue leakage and simultaneously keep a lookout on sales-purchase reports.

The purchases-sales report should be audited on a weekly or fortnightly basis

depending on the size of the establishment and number of outlets.
Along with it, there is also a need to monitor the monthly sales report that gives
you details of the sales performance of individual menu items. You should
ideally weed out the low-selling, high food cost menu items every so often to
reduce the wastage.

Other areas where the significant capital bleed in any Coffeeshop happens in
accidents and spillage. Make sure your Outlet/bar/Drive-through layout should
be free of any obstacles for traffic during the peak hours. Floors must be anti-
skid to avoid accidents.

Implement these tips in your company budgeting and price control measures
and let us know how they worked out for you in the comments below!

Put some examples from similar business

Check out this case study on Asia’s largest microbrewery, BYG Brewski, which
talks about how they were able to reduce their costs by identifying the areas of
wastage and revenue leakage