The Silent Profit Killer in Restaurants: How Waste Can Drain Your Business
8/9/20252 min read
He called me and asked if we could visit his brother’s restaurant, as he had a strong feeling that there was a specific “problem” and that the profit margins were too low.
I agreed, we set an appointment, and went to meet his brother, see the restaurant, and meet the staff. I spent about a week with them. Here’s the story:
Restaurant: Fine Dining
Type: Surf & Turf (specializing in seafood and steak — also called Reef & Beef)
Observations:
In terms of location, size, décor, staff, chef, ambiance, and menu — everything was great. It was well thought out and generously invested in.
Main problem identified:
Poor inventory management and high levels of waste!
The waste level had exceeded 22%, which is well above the accepted industry range (usually up to 10%).
This directly reduced profit margins by the same percentage.The waste included:
Leftover food from customers’ plates
Spoiled raw materials
Ingredients used in cooking
Menu items unrelated to other dishes on the menu, with very low demand and no possibility of repurposing in other dishes.
No strict inventory management system or assigned person responsible for it.
No automated inventory system or effective paper-based system — the existing one was primitive and ineffective.
No clear separation between different storage areas.
Reliance on a single supplier without updating prices from the market.
Failure to follow the most basic inventory rule in restaurants: FIFO — First In, First Out.
To save on one salary or avoid hiring a responsible person, the restaurant was losing around 22 dinars for every 100 dinars spent on raw materials — a very high loss.
Solutions implemented:
Updated the menu, removing the least-ordered items that created unnecessary overhead.
Introduced a new inventory management and control system, assigning a dedicated staff member to oversee it in detail.
Set specific portion sizes for customer dishes.
Contracted with multiple suppliers for raw materials.
Additional tailored solutions were implemented.
Message to all restaurant owners/managers:
Establish a data analysis system to track:
Dishes served to customers
Inventory levels
Menu performance
Customer behavior
Days of the week and special occasions
Raw materials, alternatives, and suppliers
Waste is the silent disease many don’t notice — but it can creep into any restaurant and cause serious damage if ignored.
Don’t underestimate it.
Also, remember that waste can include theft, which sometimes happens, and unnecessary complimentary meals that serve no real purpose.