🌱 Making Smart Business Decisions in Your Restaurant: Using Data, Not Emotion

A 2 min read.

Running a successful restaurant is an art, but it’s also a science. While passion fuels the industry, smart financial decisions keep doors open and profits growing. At a recent Tucson Originals panel, we discussed how to manage cost of goods (COGs) and labor effectively. The key takeaway? Data-driven decisions—not emotional ones—lead to long-term success.

Menu Size Matters: Keep It Tight

One of the biggest culprits of high COGs is an oversized menu. A good rule of thumb? Keep your menu under 40 items.

✅ Why? A large menu means higher inventory costs, more waste, and added complexity in execution. Instead, streamline offerings to focus on your best-sellers and high-margin items.

✅ Pro Tip: Regularly analyze your menu’s performance. If a dish isn’t selling or has high ingredient costs, it might be time to cut it.

Leverage Vendor Relationships

Your vendors can be more than just suppliers—they’re partners in your profitability. Building strong relationships and communicating regularly can help you uncover cost-saving opportunities.

✅ Success Story: One restaurant owner shopped out their entire ingredient list to multiple vendors and discovered significant savings just by comparing prices.

✅ Action Step: Ask vendors about upcoming deals, bulk discounts, and alternative ingredients that could maintain quality while reducing costs.

Work Backwards: Profit First, Then Costs

Instead of setting prices based on what “feels” right, reverse-engineer your menu pricing. Start with your desired profit and work backwards to determine ideal COGs.

✅ Example: If you want to maintain a 30% food cost and your burger sells for $15, your ingredient costs should not exceed $4.50.

✅ Take Action: Break down your food costs per dish and adjust portion sizes, ingredient choices, or pricing accordingly.

Labor: The Balancing Act

Many restaurant owners struggle with overstaffing (leading to high labor costs) or understaffing (resulting in poor service and burnout). The best approach? Cross-training and employee development.

✅ Why It Works: Cross-training allows staff to fill multiple roles, giving you more scheduling flexibility and reducing dependency on excessive labor.

✅ Employee Retention Tip: Employees who feel valued and see growth opportunities are more likely to stay. Investing in development not only improves service but reduces costly turnover.

Raising Prices? Make Sure the Experience Matches

With rising costs, increasing menu prices is often necessary—but guests will expect more value in return.

✅ Key Consideration: Higher prices should be justified by enhanced ambiance, better service, and a refined dining experience.

✅ Reality Check: A guest paying $22 for a pasta dish will expect a more polished experience than if it were priced at $16. Make sure your service, presentation, and overall atmosphere align with the new price point.

Final Thought: Data Over Emotion

Your restaurant’s success depends on making calculated decisions, not emotional ones. Analyze your menu performance, vendor costs, labor efficiency, and pricing strategy regularly. The numbers don’t lie—let them guide your next move.

Need help building a data-driven restaurant strategy? Let’s talk! Reach out at christinlmarvin@gmail.com

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