Hospitality businesses already face razor-thin profit margins. But the rising costs of labor and supplies have led one hospitality leader to declare that there’s “carnage everywhere” in the industry. 

While this may sound dramatic, business owners are doing all they can to pursue hospitality cost savings. Are you wondering how to increase hospitality profits? Here are some tips for your hotel or restaurant.

Ways to Reduce Restaurant Expenses

According to the National Restaurant Association, a typical restaurant operates at a mere 5% profit margin. But inflation has driven up the cost of supplies, and a nationwide talent shortage has forced restaurant owners to raise wages to retain workers. 

The following tips can help you find other ways to reduce overhead costs without jeopardizing the guest experience.

Remove Underperforming Dishes

Cut out any unpopular dishes from the menu. This eliminates the need to maintain the ingredients for these items, which can add to the costs of your supplies. As an added bonus, you may make room for a new dish, which may generate renewed interest in your restaurant.

Reduce Your Portion Size

Portion control can be controversial in the food industry. Some customers may feel short-changed if you reduce the size of their favorite dish. 

One approach is to keep the dish the same but offer a “small” or “value” option that’s smaller and more affordable. This may actually encourage higher sales volume while reducing the supplies (or waste) that accompany each dish.

Plan for Cyclical Demand

Restaurants go through sales cycles. Use technology to determine what dishes are most popular and when. Then, plan your replenishment cycle accordingly. Additionally, you can optimize your employee schedule to cover your most busy times or seasons. 

These practices ensure you have the resources in place to serve your guests but only when the demand is at its peak.

Cross-Train Employees

Restaurants are facing major talent shortages. One way around this is to cross-train your employees, even going so far as to have employees serving as both front-of-house and back-of-house staff. This will allow you to get more from a single employee, and it may help you retain employees who are looking for additional hours.

Optimizing Hotel Expenses

Hotels and related travel businesses can adopt a similar approach to keeping prices down. Here are some tips for controlling costs.

Install Energy-Efficient Solutions

Control utility costs through energy-efficient solutions. This might start with new appliances or an upgrade to your HVAC system. It can also include smart thermostats and light switches that help you regulate temperatures more efficiently without compromising the comfort of your guests.

Offer Prepaid Room Rates

Prepaid room rates ensure that your guests pay up front, which can reduce the number of no-shows. Some guests may see this as a movement away from flexibility, so it may be worth experimenting with a small discount to determine whether prepaid rooms can reduce the number of bookings and cancellations.

Negotiate With Suppliers

Any business owner can lower costs by negotiating with suppliers and vendors. Some suppliers may be willing to offer discounts based on volume or long-term commitment. Receiving a discount will lower overhead costs without altering the products or materials you’re bringing in.

Adopt a Flexible Staffing Model

Adopt a scheduling model that keeps your hotel staffed based on demand. Communicate that some employees may be “on call” depending on the number of bookings that you receive. And during peak periods, augment your workforce with seasonal or temporary employees.

Optimize Staffing Costs

Hospitality businesses can save money by partnering with a recruiting firm. One Haus Hospitality has the resources you need to staff your business while optimizing your costs. Contact us today to discuss how we can transform your business.