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Guide to Reducing Variable Costs

A restaurant budget is critical for profitability and success. It guides decisions, creates accountability, and provides a benchmark for financial health. This guide will discuss the foundational practices that need to be in place to track and lower costs in three key areas:

Reducing Labor Costs: Labor is the major expense for restaurant businesses. This guide details the strategies to optimize your labor spend.

Reducing Food Costs: Cost of goods sold (CoGS or food cost) is usually the second largest expense of running a restaurant. It is also one of the most controllable expenses. How well you control your food cost helps determine the profitability of your restaurant business.

Reducing Overhead Costs: Overhead costs include your directly controllable expenses, like supplies, repairs, and marketing, as well as your non-controllable fixed operating expenses, such as rent, utilities, linens, etc.