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Cost-cutting tactics help resourceful indies preserve profits

Cost-cutting tactics help resourceful indies preserve profits

Faced with escalating costs for everything from food to utilities to delivery surcharges, independent and small-chain operators who can’t benefit from volume-purchasing discounts are finding other ways to balance their budgets.

Operators who are used to running a tight ship during normal times now scrutinize every detail even closer than usual amid the struggling economy. Among the bottom-line-bolstering tactics being used by resourceful restaurateurs are open-book explanations of business finances to solicit employees’ ideas for saving money. Other survival-minded operators are doing their own landscaping, while others are being vigilant about turning off lights and powering down stoves and air conditioning when not needed.

Sanford D’Amato, co-owner of the Sanford fine-dining restaurant and Coquette Café bistro in Milwaukee, has saved between 3 percent and 4 percent on his electric bill since paying closer attention to wasted energy. Previously, staff would leave lights and air conditioning on all day.

“No one thought about it,” he said.

Now, lights in places like storage rooms are turned off routinely when not needed, and air conditioning is left off when the restaurant is closed. Plans call for heating to be more closely monitored when the weather turns cold.

D’Amato is also saving money on dishwashing and cleaning supplies by measuring them more carefully.

“We’ve cut a lot of our chemicals and cleaning supplies in half,” he said.

Like many of the European chefs he learned from, D’Amato has started doing more butchering at the restaurant, including his pork, lamb and pheasant, instead of buying pricier pre-cut meats and poultry.

“We use all the food that we have,” he said. “There is no waste.”

Tenderloin scraps go into the patés and terrines, and pheasant necks and bones go into the soup stock, for example.

Buying locally raised foodstuffs is another resurgent old-fashioned practice. Chris Hastings, chef-owner of Hot and Hot Fish Club in Birmingham, Ala., for instance, finds his longtime dedication to buying from small, local farmers and fishermen to be more relevant than ever today.

“We don’t buy lettuce from Guatemala and have things shipped from all over God’s green earth to Birmingham,” he said.

Writing the menu daily based on what foods are available also helps him control costs.

Hastings closely estimates how many customers he’ll have each night in his 80-seat restaurant and “preps to the numbers” to avoid excess food. He’s vigilant about such things, he says, even though his sales have risen about 14 percent this year.

A larger operation, the six-unit Gibsons Steakhouse chain in Chicago, also has grown more rigorous in running its various high-volume upscale restaurants. To avoid overpurchasing and over-prepping, “we get deliveries daily,” said general manager John Colletti.

Gibsons has cut back its alcohol inventory, which has helped the company budget more efficiently, he says.

“Why keep it on hand if you don’t need it?” Colletti asked.

Even reducing paper-products inventory has helped to control costs, he says.

In Sarasota, Fla., costs for wine and spirits have been creeping up for Michael Klauber of Michael’s on East.

“We have to watch our invoices every week, and we’re not getting a lot of straight answers” on why prices are rising “30 cents a bottle here and 40 cents a bottle there,” he said.

Klauber hopes that he and the other 54 restaurant owners who are members of the Sarasota-Manatee Originals independent-operators group can lower their costs for alcohol by doing group purchasing.

Reducing the frequency of bottled-beer deliveries from weekly to biweekly at Triskele’s in Milwaukee is helping co-owner Lynn Winter cut the cost of a $25 delivery surcharge in half, management says.

Cutting back on waste or overuse of paper napkins and other such products and curbing food waste has helped two-unit Nick’s Pizza & Pub in Crystal Lake, Ill., reduce costs, owner Nick Sarillo said. Some good ideas on how to cut costs have come from employees since he opened his books to them, he explained.

“It’s remarkable how the team steps up with creative ideas,” Sarillo said while noting that some employees voluntarily shaved a few hours off their schedules to help reduce labor costs.

Sarillo, whose sales have fallen at least 10 percent so far this year, is encouraged by last month’s reductions of more than 2 percent in food costs and a slight reduction in labor costs. His profit-sharing plan rewards participating employees who meet goals in food, labor and other costs, he said.

Rosati’s Pizza, a 150-unit, family-owned pizza and Italian food chain based in Warrenville, Ill., has started cutting employee hours during slower times.

“If we cut an hour a day, we save $270 a month,” said Rick Rosati, adding that he had not seen commodity prices skyrocket like they are now at any other time in the company’s 38-year history.

“We are looking at everything, every dime,” he said. “We used to meet with our distributor quarterly about pricing, and now we’re meeting weekly.”

Meanwhile, the company has been able to raise same-store sales slightly by increasing menu prices.

Reductions in labor costs were attained at Rosie’s Diner in Aurora, Colo., when co-owner Genessee Elinoff decided to halt overtime shifts. Some employees, especially cooks, who were putting in 60 or 80 hours a week now work no more than 40, although many have taken second jobs elsewhere, Elinoff said.

Labor costs are 4 percentage points lower than they were, she said. She also has cut the company’s share of health insurance premiums for all full-time employees to 90 percent, from 100 percent, and expects to cut that to 50 percent next year.

“I am not very proud about it, but we have to do it,” she said.

To help cover increased costs on many fronts, she raised menu prices 11 percent, or about $1 on every item.

Her customers, many of whom are regulars, did not balk at the increases, she said, although some are coming in more for breakfast and less for dinner.

Elinoff and her husband recently started doing their own landscaping on their 1.3 acres instead of paying a landscaping service.

“The lawn is not as nice as it used to be, but it’s a small sacrifice,” she said.

Other operators have cut back on the complimentary foods they’ve traditionally served. Higgins in Portland, Ore., puts less bread in its bread baskets, and the three Ciao Baby restaurants on Long Island, N.Y., are serving cheaper grilled eggplant instead of Parmesan cheese with roasted peppers and bread.

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