Matt Paice's One Percenters, Part 1: Costs & Operations

Part 1: Costs & Operations
Tightening the screws on what you spend

By Matt Paice

Over a recent lunch at Quo Vadis, I was talking with Rav about our respective restaurants and how we try to turn a profit. I mentioned to her the concept of “one-percenters.” 

The idea is this: there isn’t one single lever you can pull to make your restaurant much more profitable, but there are a lot of screws that can each be tightened half a turn. Ten changes that each add one percentage point of profit become real money. So here, in no particular order, are some ideas for one-percenters in your business; they are not just cost reduction measures but also ways to tweak revenue up a little, or optimise your staffing levels. Most of them unfortunately require a certain amount of work; they’re not magic tricks. 

You may be practising all of these already. Some are things you do only once, but others are worth re-doing a couple of times a year, so if nothing else let this article act as a nudge.

Before we begin, a general point: Read your management accounts

The number one piece of advice I give to any operator is: make sure your accountant is giving you timely, accurate and useful management accounts every month, and read them. ‘Useful’ here means containing the right metrics: splitting out food and drink revenue by service occasion, with plenty of detail, like-for-like numbers, and ratios like overheads %. Your running bank balance is an actively misleading indicator of your business performance since restaurants always sit on piles of cash that are actually owed to HMRC, suppliers and staff.

Shave your schedules

There was once a time when raw ingredients were a restaurant’s biggest cost. No longer: it’s now labour.

Five labour hours at minimum wage removed from each week’s rota is worth some £4,000 a year once on-costs are included. Payroll is one of the few areas where shaving tiny amounts consistently produces large yearly numbers; you’re not going to get managers to drop a whole staff member from lunch but you can get them to start one staff member an hour later and send someone else home an hour early, when the opportunity arises. There isn’t a way round this beyond constant nagging.

I recommend using productivity as the metric for your labour rather than cost percentage. Productivity is measured as net revenue per staff hour, so for FOH take your weekly net sales and divide them by total FOH labour hours; you want that number to be around £100. For BOH, take net food sales and divide by total kitchen labour hours, and you want to aim for £50 here. The benefit of using this metric is that any staff member with access to your rota can do this sum themselves, rather than labour % which needs a calculation from your P&L. And unlike labour %, someone getting a payrise has no bearing on productivity performance.

Cut non-value-add processes

Hospitality has a habit of creating administrative rituals that survive long after anybody remembers why they exist. I remember more than one past job where my first week involved throwing out two dozen shoe-boxes filled with card machine Z-reports that noone had ever questioned the reason for keeping.

Weekly food stocktakes, weekly EHO-level checking, line-by-line entry of fruit & veg invoices into stock management systems, three-paragraph end-of-day reports… all of these consume staff time that could usefully be deployed elsewhere to reduce your overall labour cost. If your head chef or GM is spending hours on low-value administration, they are not spending those hours improving the guest experience or driving revenue. My idea of a good end-of-day report is a WhatsApp photo of the Z from the POS, and one sentence of commentary. I have never ever missed the style of report that tells me “the evening started slowly yet steadily but built to a crescendo, with Charlie slinging the negronis like a boss.” I’ve spoken to many GMs and restaurant managers at the recruitment stage and asked them how many people they thought read those EODs they painstakingly typed out at five to midnight, and the universal answer was “zero.” If you’re not acting on the information, why are you collecting it?

The same logic applies to guest communication. If managers are repeatedly answering the same questions by email, the process itself probably needs redesigning. At Chishuru, I drastically reduced standard enquiry emails by making the website contact flow more structured and pushing visitors to the relevant pages before they see our email address. There’s a natural tendency amongst hospo managers to think that laptop time is grown-up time and it’s a good thing to discourage.

Obsess over proteins

In my experience in ops, overall food GP is driven by a surprisingly small number of menu items, typically the dishes built around expensive proteins (there is no such thing as cheap protein any more). A new supplier giving you a keener price on baby gem lettuce won’t move the business materially. Portion control, allowing for accurate yield and pricing on high-cost proteins absolutely will.

I banned octopus from the group’s menus in my last ops job because it was so difficult to cost accurately: between excess ice on delivery and shrinkage during cooking, the true usable yield was far lower than it first appeared when the chefs did their notional GP calculation. Likewise, over-portioning on a lamb dish had a large effect on GP. For whatever reason chefs are far more likely to underprice an item than overprice it at the development stage.

Current inventory management software treats all percentage cost changes equally when in fact 8% on the kg price of brown onions means nothing compared to 2% on the price of bavette.

Stocktaking is a journey not a snapshot

You don’t even need to do a stocktake to calculate your margins accurately: averaging three months’ purchases versus three months’ sales will flatten out any ups and downs you see in monthly stock levels, and give you true GP figures.

If you are going to monitor stock closely, doing meticulous stocktakes but then not following up with investigations is no more worthwhile than doing no stocktaking at all. Investigations are time-consuming and difficult: variances can be explained by any number of things from mis-counts, double-counted invoices, missed credit notes, an old miscount in last month’s stocktake, the button on the till being linked to the wrong item… This is the ‘one-percenter’ principle in action, as frequently stock errors turn out to be simple data entry problems, but you will sometimes catch something worth real money. And stocktaking combined with investigation is the only way you catch theft. Regrettably, about half the people I’ve ever sacked from restaurants I sacked for alcohol theft, and it mostly started with stock variance (I also needed the support of honest staff members).

Don’t buy the cheapest deal, buy the right one

For both utilities and card processing fees, the secret to getting the best deal is not the lowest headline price, it’s finding the best fit for your business. The lowest unit rate for gas on the market might not be the best choice if your usage is low and the supplier’s daily standing charge is high. Similarly, super-duper Visa Debit rates won’t matter much to a restaurant that sees loads of international and business credit cards. The market is constantly moving (right now Flatpay are undercutting Dojo for example) so it’s worth revisiting frequently.

Long fixed-term utility contracts should also be understood properly; they are not free certainty. You are paying somebody else to absorb future price risk — and the utility company’s prediction of future prices is unlikely to be less sophisticated than your own. Plus, brokers get bigger commission on longer deals.

Finally I’d love to persuade more people to stop taking American Express. I’ll get hate mail from AmEx I’m sure but it’s not your job to fund air miles for your customers. My experience has been that around 20% of our customers try to pay with AmEx, and 90% of them are completely unphased when we say we don’t accept it; and then the majority of the remainder are chill when we explain the enormous cost difference of AmEx versus other payment methods. It is alleged – usually by AmEx themselves – that accepting it brings you high value customers, but we spent some £14,000 in AmEx fees in 2024 and at that level I can happily afford to lose the business of a handful of their cardholders.

Count your linens

It’s common across both sides of the Atlantic for restaurateurs to regard linen companies as evil, but I finally stopped thinking of London Linen as the Death Star when I realised how they actually work. Linen companies generally charge based on the total stock in circulation between your restaurant and their facilities, not (as you might expect) your weekly usage – which means surplus stock is your hidden cost. The way to manage this is to count everything carefully and record it; you then get an accurate picture of how much you use and can tweak your stock levels accordingly. At Chishuru, setting our linen stock levels properly saved £150 per month. I also recommend getting your linen supplier to do a stocktake a couple of times a year, for greater accuracy.

And finally… Don’t drive yourself crazy

When I was a street food trader, I used to make a half-hour round trip to Booker to save £5 on my takeaway boxes. Eventually I realised I was valuing packaging more highly than my own time, and I used a rule of thumb that I was worth £15/hour, to help me decide how much to devote myself to penny-pinching.

In my ops role, I once did a whole painstaking analysis of group-wide spend on BOH chemicals and cleaning products. The only item where we spent more than £1,000 a year was blue roll. Switching suppliers for a 15% saving on lemon floor gel would have achieved bugger all.

Cost control matters, but your time is finite.

Continued in Part 2: Revenue & Tech
Published Sunday, June 14th