How to Avoid Unexpected Restaurant Costs

Keeping restaurant costs in check is a full-time job when managing an establishment. Whether you're the owner, chef or part of a culinary management team, running a successful and profitable restaurant relies upon following a business plan and staying within budget. No one dreams of the things that could go wrong when opening a new restaurant, but knowing what may happen beforehand could save your checkbook and your business.

You should already know the monthly mortgage or rent payment of your space, have a rough idea of utility costs, and be aware of what the fixtures and kitchen equipment cost, but it's hard to predict the price of unexpected problems until something happens. Follow these precautionary measures to keep missteps to a minimum.

Equipment Failures

Purchasing kitchen equipment is one of the more costly expenditures a restaurant incurs. Repairing them when they unexpectedly break down is not only expensive, but a terrible setback to business. Having to do without grills or fryers in a burger restaurant is more than just a small inconvenience — it can represent a major loss in revenue. It's not always feasible to have backup equipment on hand, but you should always have enough capital to repair the equipment quickly, or at least enough for a deposit to purchase a new one.

Foodborne Illnesses or Bad Reviews

Getting a report that someone found a hair in a dish could strike a serious blow to your name, especially if that patron plasters it all over social media. A customer contracting a foodborne illness after eating in your restaurant is far worse, not only to your reputation, but to your checkbook as well. Protect yourself against expensive lawsuits and legal fees by having adequate general liability and property insurance coverage (and always make sure kitchen staff ties their hair up).

Injuries

Another potential blow to your bank account are injuries, whether to employees or customers getting hurt on restaurant property. Lawsuits could potentially put you out of business if you don't have insurance. Make sure your kitchen staff is trained in kitchen safety and knife skills. Keeping walkways and parking lots well-lit and clear of snow and debris will go a long way in preventing customer falls and injuries.

Theft

Robberies and break-ins are a concern for any business, but employee theft is a silent restaurant killer. It can escalate quickly, from just sugar packets to expensive bottles of alcohol from the liquor locker or steaks taken from the freezer after hours. Time theft, when employees are paid for hours they didn't actually work, can also quickly add up. All it takes is a little per day to send restaurant costs skyrocketing. Install security cameras inside and outside the establishment and possibly invest in automated time cards. Add locks to liquor lockers, coolers and freezers, know who handles cash and receipts and place it all in locked safes. Lastly, know who you're working with. Conduct background checks and contact past references before hiring new employees.

Other unexpected expenses to consider include legal changes in minimum wage or employee benefits, unexpected food costs from agriculture problems like avian flu, vandalism or unavoidable emergencies like storm damage. Every restaurateur must deal with one or more of these issues over the course of their career, so remember the adage "When you fail to plan, you plan to fail." A wise culinary management team will follow a plan and keep restaurant costs in check at all times — expected or unexpected.

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