How to Identify Needless Costs in Your Hospitality Business

Management 8 minute read 5th October 2020

It’s thought that the median cost to open a restaurant stands at just over $3,000 per seat in the US. A hotel? Well, that’ll set you back a mere $115,000 per room for a midscale property.

But what about the on-going costs? Back in 2016, research suggested that hotel operating costs in the UK had risen by a staggering 53%.

average hotel operating costs

This is why keeping tabs on your overheads is critical. Whether it’s business as normal or you’ve encountered a challenge (big or small) that means you need to drastically cut your expenditure, knowing where to make those cuts is vital.

This is a business skill every cafe owner, restaurateur and hotelier needs to know, and we’ve got the low-down on cutting operating costs - sensibly - for two of the hospitality industry’s biggest players.

How to reduce hotel operating costs

how to reduce hotel costs

Good news. If you’re a hotelier, it is possible to reduce overheads without denting the guest experience, upsetting the team or - worse - having to lay any of them off.

  • Review your OTA strategy. You might be taking too many bookings via online travel agencies (OTAs). In doing so, you’ll be severely denting your bottom line with too much expenditure on commission. The common cause is often paying commission on return bookings, so focus on driving more of those guests direct.
  • Get energy efficient with your utilities. LED bulbs, turning off all but the essential room amenities when not in use and installing occupancy lighting sensors are just some energy saving strategies recommended by Energy Star (a program run by the U.S. Environmental Protection Agency and U.S. Department of Energy, but taken not of throughout the world).
  • Jump on maintenance tasks quickly. Leaking bathroom taps can quickly become something far more costly if not seen to. That’s just one example of a maintenance task that will get far worse when left to fester - a classic hotel mistake.
  • Look for cloud-based alternatives. If you’re still operating on-premise software that costs you considerably in support and maintenance fees, speak to the vendor. Chances are, they’ll have a cloud version either ready now or waiting in the wings that will drastically reduce your overheads.
  • Reduce restaurant costs. It might be one of the biggest budgetary black holes in your hotel business. Revert to our tips below!

How to reduce restaurant operating costs

how to reduce restaurant costs

Did you know that the average restaurant wastes nearly 75,000 pound of food each year?

That statistic really does hit you between the eyes, given how much poverty there is in the world. But, if you run a restaurant, you could be contributing to it - significantly.

Food waste is just one area in which restaurants struggle to keep a hold on their expenditure. Here are some of the best tips we found for reducing the operating costs in a restaurant:

  • Tackle food wastage head-on. There’s no ignoring it - your restaurant almost definitely wastes food. To ensure this isn’t damaging your business, implement digital inventory software, work strictly from a kitchen prep list and re-use the stuff you’d normally throw away, when safe to do so.
  • Set a budget. Be honest - do you work from any kind of budget in your restaurant? If not, how do you know when you’re overspending? If working on the measures we’re listing here is already tricky, it’s probably because of a poor/non-existent budget.
  • Get labour expenses under control. This isn’t a call-to-arms for a mass cull, either. Instead, it’s about getting smart with your staffing. So, work hard to reduce staff turnover, and ensure those you have cover as many tables as is efficiently possible.
  • Look for energy leaks. Are you using LED bulbs in your restaurant? What about the appliances in the kitchen - are they all Energy Star certified? Ditch old kit that’s adding significantly to your electricity bill and replace it with more energy efficient versions - the outlay will pay back dividends.
  • Automate. Your time is expensive, but you probably don’t put a price on it. How many tasks do you undertake personally each week that should be automated by software? Invoicing, supplier payments and standard guest email communication are common examples of tasks that eat up expensive time.

I’m a restaurateur: should we join the delivery movement?


No, really - this is rapidly becoming a question to which there is only one answer. World-wide pandemics, industry disruption and an ever more expectant customer base means home delivery is something every restaurant should get involved in.

As you’d guess, this is a big yet fascinating topic in its own right. Thankfully, we’ve already put together two brilliant guides for restaurateurs who are considering joining the delivery revolution.


Cutting costs isn’t always fun; there’ll be suppliers you realise you no longer need and, consequently, a few noses out of joint by the end of it, but, sometimes, your hand is forced.

Equally, cost cutting can be an enjoyable experience. Once you identify those overheads that are completely needless, you’ll discover how much additional cash you’ll have in the bank account each month. And cash remains king - never forget that.

Get Started With Free WiFi Marketing

Beambox helps businesses like yours grow with data capture, marketing automation and reputation management.

Sign up for 30 days free

Grow your business and customer loyalty with guest WiFi!

Related posts