In a challenging environment marked by rising food costs, labor shortages, and inflation, restaurant owners are seeking ways to manage expenses without sacrificing quality or resorting to hidden fees. Daniel McCoy, Senior Business Consultant at the University of Georgia’s Small Business Development Center at Kennesaw State University, outlines several strategies for operators to maintain profitability while meeting customer expectations.
McCoy emphasizes the importance of understanding cost dynamics: “A simple cost analysis revealed cost for the inventory was up by 40 percent or more in several categories, however, he had not raised prices since after the pandemic. I helped him understand the principle of Cost of Goods and how it affects the bottom line. This is the first rule for increasing profit margins.”
He notes that some restaurants have added “service fees” rather than adjusting menu prices, but cautions against such practices. “I have questioned my server about it and have gotten everything from ‘It is instead of printing new menus all the time’ to ‘It is compensation for the hostess and back-of-house staff.’ Uh, no! They lost my business,” McCoy says.
Menu engineering is presented as a core tactic. By analyzing each dish’s profitability and popularity, restaurants can streamline offerings and reduce unnecessary inventory. Tactics include highlighting high-margin items on menus, removing underperforming dishes, cross-utilizing ingredients to minimize waste, and conducting regular menu audits.
Inventory management also plays a crucial role in reducing costs. McCoy recommends using inventory software for real-time tracking, applying First In First Out (FIFO) storage principles, and training staff on portion control and proper storage methods.
Negotiating with suppliers is another key approach. McCoy shares an example: when chicken wing prices rose by 70 percent, a restaurateur tried a different supplier but found that customers noticed the drop in quality. Once prices normalized, returning to the original vendor restored customer satisfaction.
Technology adoption can further improve efficiency and lower labor costs. Tools such as AI-assisted scheduling and point-of-sale systems with analytics help optimize staffing levels and monitor performance. Kitchen display systems can speed up service and reduce errors; online ordering systems streamline front-of-house operations.
Staff training remains essential. Rather than cutting hours during slow periods, McCoy advises smarter scheduling based on sales forecasts. He encourages cross-training employees for flexibility and providing incentives for cost-saving initiatives.
On pricing strategy, McCoy suggests psychological pricing techniques—such as pricing an item at $14.95 instead of $15—and bundling items into value meals to enhance perceived value without deterring customers.
“Just remember, controlling costs does not have to mean cutting corners — it can mean working smarter. By leveraging data, empowering your team, and embracing technology, you can protect your margins while continuing to deliver the quality your guests expect,” says McCoy.
Daniel McCoy has been recognized with multiple awards for consulting excellence at UGA SBDC and contributes regularly to Restaurant Informer Magazine—the official publication of the Georgia Restaurant Association—sharing insights on industry best practices.
