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What are Common Restaurant Expenses?

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  • Written By: A.E. Freeman
  • Edited By: Jenn Walker
  • Last Modified Date: 21 September 2016
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Common restaurant expenses include paying employee's salaries, the cost of ingredients, maintenance expenses, and advertising and marketing expenses. Other restaurant expenses often include the cost of getting the business up and running, such as decorating the restaurant's building, paying any fees required to establish the business and licensing fees if the restaurant is a franchise. A restaurant also needs to pay a mortgage or rent to stay in their building and for utility costs.

Restaurant expenses include the cost of labor, including employee's wages as well as any applicable taxes. If a restaurant offers benefits to employees, that is another expense that needs to be considered. The cost of labor is typically an expense the restaurant can keep under control and manage. For instance, if a restaurant owner needs to keep costs down, he may only schedule one server per shift instead of two, or he may choose not to offer benefits to every employee.

The cost of goods such as food and drink is another important restaurant expense. The restaurant must know how much it spends on ingredients so it can price its entrées and other menu items properly. Managing the inventory is key to keeping restaurant expenses down. A restaurateur must know how much to order so the restaurant won't run out of products during a shift and to ensure the ingredients will be used in a timely manner and not go to waste.

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In addition to the cost of food goods, a restaurant needs to account for operating expenses, such as the cost of plates and utensils as well as pots and pans for use in the kitchen. Upfront expenses typically include the cost of a stove and oven, refrigerators, and freezers in the kitchen. Office supplies, such as a computer, printer and telephone, should also be included in a restaurant's operating expenses.

Rent, utilities and insurance are other common restaurant expenses and are referred to as occupancy costs. While some of these expenses, such as the rent or mortgage, are fixed from month to month, others, such as the electric or gas bill, can fluctuate depending on the season and the amount of time the restaurant is open. Occasional expenses, such as the cost of repairs and maintenance on the restaurant's property typically fall under occupancy costs as well, as do property taxes, sewage, water use and the cost of waste removal.

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whiteplane
Post 3
Food costs will be a significant part of the budget for almost any restaurant. I have a buddy who tried to start up a restaurant, and of all the costs he calculated, this was the one that always went over budget. It is a constant cost and any good restaurant will invest in quality ingredients, which never come cheaply, and can sometimes be hard to budget for.
tigers88
Post 2

@summing - You are right. I actually worked for a while for a marketing company that would pay people to post positive Yelp reviews for various restaurants and local service companies. You might call it dishonest but all kinds of business do this kind of thing.

Having positive customer feedback is crucial for a restaurant these days. Sites like Yelp and others have become incredibly popular and they show up early in the search results. If you are not getting people to comment on your restaurant or they are leaving negative comments sometimes you have to take control of the narrative yourself.

summing
Post 1

One restaurant expense that is often larger than people expect is the money spent on marketing. Most restaurants will take out a print ad and many will also advertise on the radio, online and even on television.

It makes sense when you think about it. There are tons of restaurants out there and most of them serve the exact same things. Serving beer and hamburgers is not enough to get people to notice you. You have to find ways to get your name out there and direct the perception of your bar.

Maybe you focus on the food, or the atmosphere, or a sports package or pretty waitresses. You have to let people know about your strengths.

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