Operations
Restaurant operators face monetary strain from numerous prices and declining buyer visits, with many overlooking potential financial savings in “mounted prices” like utilities and waste providers. Whereas negotiating these charges can yield financial savings, hiring a cost-reduction guide is an efficient strategy.
Photograph: vivoo – inventory.adobe.com
June 16, 2025 by Larry Levine — Expense Discount Advisor, P3 Price Analysts
Restaurant operators are being pressured on all sides — meals prices, labor prices, hire, taxes, waste, uniforms and vitality bills. On prime of that, restaurant visits have decreased as individuals have much less discretionary funds to dine exterior of their properties.
Restaurant employee labor charges are on the rise with some municipalities eyeing $25 per hour for his or her restaurant employee constituents.
As a lot as 80% of the pork eaten within the US comes from China and presumably topic to President Donald Trump’s tariffs. Though most hen and beef merchandise are raised within the US, they, too, are affected by tariffs as a lot of their feed provide chain comes from China in addition to most of the farm gear wanted to assist these shares.
A lot is claimed about making sensible meals selections, optimizing labor practices and selecting distributors who supply comparable merchandise at decrease charges. Not a lot is claimed, although, about these many “mounted prices” most eating places take without any consideration — telecom, utilities, waste, uniforms/linens, insurance coverage, property tax and extra.
Most restaurant operators try to barter hire with their areas’ landlords or buy worth with the properties’ sellers. However most shoppers of those “mounted value” providers merely settle for the quoted charges from their distributors as the ultimate phrase on worth and phrases, apart from maybe linen portions and waste pickup days. Some shoppers, as hesitant as they might be, may try to barter the charges supplied by their vendor and be fairly glad to be supplied a 5-10% low cost.
However that’s really what everybody ought to do — ask for decrease charges, maybe in change for longer phrases or in change for not going to their competitor. The worst that can occur is that the seller will say no and you’re again the place you left off. In lots of instances although, you’re going to get higher charges — 5% or extra reductions. Your phone firm and electrical energy or fuel could not transfer as simply, particularly if you happen to function in a regulated vitality state, however maybe your telecom operator can optimize your plans and consolidate telephones and minutes and alter your service tier. There are numerous different Telecom choices, particularly within the cell phone market the place your restaurant’s regional managers want their cell telephones, or within the VoIP market on your restaurant telephones.
Related is commonly true on your waste and uniforms/linens distributors — negotiating charges, optimizing service ranges and contemplating alternate distributors (both used as a negotiation tactic or for actual). Property tax reductions should not as simple however are sometimes fairly potential — particularly for bigger restaurant properties.
If every of your restaurant areas is spending maybe $5,000 per thirty days on telecom, utilities, waste, uniforms/linens, property tax (I guess it is extra) — or $60,000 per yr, financial savings even 5% equates to $3,000 per yr saved. 10 areas and that’s $30,000 money straight to your backside line.
The rub right here is that you just’re probably not an knowledgeable within the utilities, waste or uniforms/linens industries — to say nothing of the period of time your crew doesn’t have accessible for this activity. Little question, you already know the precise Pantone coloration and thread-count of your linen napkins in addition to what number of you will want for Mom’s Day weekend, however have you learnt what worth you’re paying for that serviette, amount 1, 100, 1,000, 10,000, a lot much less the seller’s value? How a lot does it value your waste vendor to haul your waste?
Do you bear in mind your value accounting class out of your MBA? I do know I do. Enterprise success stems from realizing and managing prices. The identical is true for waste pickups and the remaining. Your waste vendor could also be charging you $1000 per thirty days for every of your 10 areas. That is a discount in comparison with hauling the waste your self, however what’s that restaurant throughout the road being charged for principally the identical service. Is $900 a good quantity? How about $200? How a lot do their linens and napkins value? Go forward and ask for worth reductions. It’s possible you’ll get some. It’s possible you’ll not. Even if you happen to do get a worth discount, your costs could begin to creep again up with out you even realizing it — no matter what your contract says.
By now, you could be considering that it is not price it. I’ll solely get a number of {dollars} and the ROI will not be there and I must give attention to bringing in additional shoppers, higher meals, labor, tradition, ambiance, the air-con, the brand new range, oh my god… It’s possible you’ll be proper — if you happen to do all of it your self.
Who does your bookkeeping, information your taxes, represents you in courtroom, runs your social media? I guess it is a bookkeeper, a tax preparer, an legal professional and a social media company — all consultants of their fields and capable of carry out the required work successfully and effectively. The identical is true for these oblique vendor [over]costs.
End up a value discount guide with experience in these industries — telecom, utilities, waste, uniforms/linens, insurance coverage, property tax and extra. They’ll work in your behalf — with their deep business experiences — to barter charges, phrases and circumstances in your favor and can work to scale back your distributors’ charges 10%, 20%, 30% and generally as a lot as 75% from the place they have been. Essentially the most skilled value discount corporations are capable of obtain 30-40% common value discount throughout a enterprise’s oblique vendor spends – for as many as 90% of their shoppers. Additional, the business customary payment construction is a contingency payment — their charges are contingent upon discovering financial savings – there is no such thing as a payment if they can’t scale back the spends along with your present distributors and so they share within the financial savings discovered in the event that they do. There actually isn’t any danger, no service interruption, nor burden in your employees — the ROI is nearly infinite.
Is your restaurant one of many 10% who’ve all of their vendor charges at cost-level or are even a few of your vendor charges within the 90% a part of the market who’re overcharged?
Now, return to that instance from earlier than of the restaurant spending $5,000 per thirty days or $60,000 per yr on this group of bills. A 30% discount ends in is an $18,000 annual improve in web margins for that location and maybe $180,000 annual improve for a bunch of 10 eating places — all with out a change of service high quality, pickup schedule or thread depend.
How a lot did you save along with your labor optimizations, meals provide chain and menu modifications? How a lot did it have an effect on your menu pricing and the way a lot time and labor did you spend on this? Little question it’s important to do these duties too to function and maybe even to outlive. I argue that you just additionally want to scale back your oblique spend to compete on in-restaurant expertise, meals and labor high quality, acquire a aggressive benefit and maybe even to outlive.
About Larry Levine
Larry has over 35 years of business expertise in excessive tech, house care and Oblique Spend discount consulting. Having labored at numerous excessive tech firms together with Information Basic Company (now Dell Applied sciences) and Lucent Applied sciences (now Nokia) in his early profession, proudly owning and managing a House Care firm in his center profession and now proudly owning and working a Price Discount franchise, Larry has gathered expertise and deep expertise working with people, small and medium companies and Fortune 100 enterprise executives. His nation-wide shoppers span a number of industries together with automotive,
