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  • Jay Zweibaum

5 things you can do NOW to reduce your operating costs


Trying to control costs in the hospitality space?

I know that growing a business is exciting! And you need to be an expert in so many things: Sales, marketing, labor law, procurement, contracts, employee relations, finance, etc. But it can also be overwhelming and the multiple demands can ultimately lead to low or no profitability.

So, how do you continue to grow your business but remain profitable? Below are 5 simple steps you can take today to reign in expenses and turbo-charge your profitability

  • When was the last time you bid out your major suppliers? Even when you have a great relationship with your supplier-partner, you should always be looking for alternatives and ensure that you have the best market prices. Now is the time to review your contracts and speak with your suppliers about your needs to cut costs and demand best in class pricing and value. Simply by asking almost always results in savings!

  • Have you done an analysis of your labor rates and overtime? Valuing your team is always critical but that doesn’t mean that you should ignore overtime or be undisciplined in your labor rates. Referencing market studies by position is always important to ensure you are in the correct range. Keeping track of unscheduled overtime will save you a lot of money and headaches. Do you have a tool to track and control time? Be sure to set standards for overtime authorization and be disciplined in monitoring and controlling your employees time. Most likely, salaries & wages is your most expensive variable cost.

  • Have you reviewed your liability insurance rates recently? This may seem like an odd one to many, but the cost of liability insurance is significant and will increase as you grow. You have to actively manage this expense, and being in the hospitality space, rates can be high! Keep track of your incidents and accidents, have a safety policy in place and manage your risk and open claims. These actions will help you negotiate better rates with insurance suppliers.

  • Sweat the small stuff…All of those pennies add up! It is really easy and often necessary to make quick decisions on small expenses. But accurately tracking them and evaluating the impact of the costs drives profitability – let me provide a few examples. Reviewing your p&l monthly (and year over year) will help to identify areas of opportunity very quickly; such as office supplies, team meals, uniforms, telephone expense, advertising and the like. Increases should result in a deeper dive to understand the cause and ultimately the benefit of the expense – reduce where you can!

  • Driving volume cures most ills– most of all, make sure you are taking care of your customers, driving average spend upwards, increasing trial by new customers and increasing frequency of existing customers. If you are growing faster than expenses, profitability expands! That is the ultimate thrill. Also, setting goals for new sales and client retention provides targets for your teams, consistent measurement and something to strive for as an organization. Sell, sell, sell

An ongoing focus and effort to control costs is good fiscal management and good business. These are just a few of the areas that all good leaders should review and control.

Each business is different, but if you take care of the pennies, the dollars will take care of themselves.

If you would like to discuss your business needs or want more information, don’t hesitate to contact Two Tree Consulting at

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