What do I mean by Two-Prong Strategy in Restaurant business

I interviewed a lot of restaurant owners last week and all of them acknowledged that recession has hit the industry hard. Most of them (rather all of them) are still concentrating on improving the margins; not by focusing on revenue generation but by concentrating on cost reduction methodologies. I personally feel that during such uncertain times, working only on one of the dynamics would be unfair (or foolish!!). Agreed to the fact that saving costs by reducing number of employee hours or redesigning the operations might help, but lets face it..how much 10% 15%..ok lets say optimistically 20%. While lot of energy and resources are utilized to reduce the expenses, the revenue still stands same (though in most cases the % drop is way more as compared to cost saved). A comprehensive strategy would be work with both the wheels at the same time. And with this thought in mind, I will be recommending various suggestions from time to time that if followed should make the balance sheet, income statement and cash flow statement much glamorous!!

Since most of the owners (or managers) are receptive about cost methodologies, I would list down 5 steps that should reduce the energy and water expenditure. You might ask why I chose energy/water, because almost 20% of the cost falls in this domain. So here it goes

1. Install CFL's : These are little expensive, readily available, has longer life and less energy consumption

2. Use high-efficiency pre-rinse spray valve for dish-washing

3. Regularly inspect and replace worn out cooking ranges, refrigerators, coolers, freezers, door gaskets, condenser coils etc. YES!! Don't wait for the things to go really bad. Buy and invest in Energy star qualified models

4. Fix water (esp.hot water) and ventilation leakages immediately. Wasted water, water heating and sewage costs can add upto thousands easily

5. Last but not the least, Set an Energy Management plan for your restaurant. This is something that needs to be discussed in detail and hence I am still researching on it and would post my findings shortly.

Just an Eye opener: Average energy consumption in a full service restaurant is Food preperation (35%), HVAC (28%), Lighting (13%), Sanitation (18%), and Refrigeration (6%) [Ref: Conserve.restaurant.org]

Till then, Happy saving..

Gaurav Toor

Business Consultant, Toffa