Complete Guide to Cost Control in Commercial Restaurants

Running a successful restaurant requires attention to every detail of financial management. Success relies on tracking expenses across food, labour, rent, utilities, and equipment, and managing each category wisely to maintain stability and long-term growth.

Building a profitable operation means controlling the cost of operating a restaurant while maintaining consistent service and product quality. For restaurant owners, streamlining workflows, investing in energy-efficient equipment, and monitoring expenses regularly can significantly improve cash flow and profitability. 

Read on for actionable insights and proven restaurant cost control strategies that help Canadian operators reduce overhead, manage prime costs, and protect margins in a competitive industry.

What Are the True Costs of Running a Restaurant?

Restaurant costs include all ongoing expenses required to operate a food service business, such as food, labour, rent, utilities, insurance, and maintenance. 

According to Toast, average restaurant operating costs in Canada consume 90 to 95% of total revenue, leaving a 5-10% profit margin when managed effectively.

• Food and labour, known as prime costs, make up the largest share at 60 to 65% combined

• Utilities typically account for 3 to 5% 

• Marketing expenses range from 3 to 6% of sales. 

Effective total cost control in restaurants begins with understanding how each expense category affects your budget. With this knowledge, owners can manage spending, improve efficiency, and sustain profitability, whether in a quick-service restaurant or a high-end dining establishment.

How Much Do Restaurants Spend Monthly?

The monthly cost of operating a brick-and-mortar restaurant varies widely depending on its concept, location, and service model. On average, labour costs account for 20 to 30% of gross revenue, while utilities add another 3 to 5%. 

The rest of your monthly expenses comprise other major categories, such as food, rent, maintenance, and supplies. 

Understanding how each expense fits into your restaurant’s cost structure is key to improving margins. Regularly reviewing your restaurant operating costs breakdown helps identify where to cut waste, improve efficiency, and maintain profitability without compromising quality.

Monthly Restaurant Operating Costs Breakdown

Typical restaurant startup costs often include the following: 

• Food and beverage: Variable costs affected by menu pricing, ingredient sourcing, and sales volume

• Labour: Payroll, employee benefits, and staff training

• Rent and utilities: Monthly leases, electricity, gas, and water

• Maintenance and supplies: Equipment servicing, cleaning products, waste management, and smallwares

• Technology and administration: POS systems, accounting software, and inventory management tools

• Marketing and retention: Local promotions, loyalty programs, and customer engagement initiatives

How to Cost Control in Restaurants

Effective cost control in restaurants starts with understanding which expenses impact your bottom line most. Food and labour costs fluctuate with sales, supplier pricing, and staffing levels, while rent, utilities, and maintenance remain consistent each month. 

Recognizing how these expenses interact gives operators a comprehensive view of their restaurant finances. With that insight, you can plan budgets more accurately, confidently manage cash flow, and maintain healthy profit margins even as expenses fluctuate.

Manage Prime Costs Effectively

Prime costs, the combination of food and labour, account for 60 to 65% of total restaurant expenses and have the greatest impact on profit. Managing these costs requires precise tracking, strategic scheduling, and regular analysis to ensure optimal use. 

Monitoring food costs weekly and aligning labour hours using scheduling tools with demand helps prevent margin erosion. Even small sales increases lead to noticeable profitability gains when prime costs are kept in check.

Engineer Your Menu for Profitability

Menu engineering can boost profits by 10 to 15% without raising prices. By analyzing sales and cost data, operators can identify high-margin dishes worth featuring and low performers that drain resources. 

When developing your pricing strategy, factor in fixed costs (rent and utilities) and variable expenses (food, labour, and marketing costs). Use pricing psychology in your menu layout to guide customer decisions, strengthen margins, and minimize waste. Regular reviews ensure your offerings stay aligned with market trends and ingredient availability. 

Actionable food cost control tactics:

• Review menu performance every quarter: Identify top-selling and low-margin items to refine your offers.

• Highlight profitable dishes using visual emphasis: Use layout, icons, or design cues to draw attention to high-margin menu items.

• Simplify or retire costly, low-selling items: Focus your menu on what sells best to cut prep time, reduce spoilage, and streamline operations.

Portion Control to Reduce Food Waste

Strict portion control helps maintain consistency, reduce waste, and protect food cost margins across every service. By standardizing recipes and using precise portioning tools, restaurants can lower ingredient overuse and improve profitability. 

Training staff to follow measured portions ensures that every dish maintains presentation standards while avoiding unnecessary waste. Beyond cost control, consistent portions also improve guest satisfaction by delivering reliable value and quality with every order.

Actionable tactics:

• Introduce standardized recipe cards: Define exact quantities and steps for every dish. This ensures consistency across shifts, employees, and turnovers.
  

• Use portion scales and measuring utensils: Accurate tools help manage inventory and eliminate guesswork in prep, ensuring consistent servings and efficient workflows.
  

• Track plate waste to adjust serving sizes: Unfinished plates reveal guest preferences. Monitor what’s left eaten to refine portions and better match with customer expectations.
  

Improve Inventory and Waste Management

Strong inventory control reduces spoilage and waste while maintaining optimal stock levels and keeping food costs low. Applying structured systems and digital tools can help restaurants track usage, cut waste by up to 30%, and reinvest cost savings into growth. 

Leverage Technology for Cost Efficiency

Technology helps any restaurant business reduce operating expenses by automating daily processes and improving accuracy across key cost areas. 

• Kitchen management platforms and digital supply tools track ingredient usage, reduce waste, and support controlling food costs across multiple locations. 

• Automated purchasing and forecasting software optimizes supply levels, preventing last-minute spending and improving overall food cost. 

By integrating these technologies, restaurant owners gain real-time visibility into performance, streamline operations, and maintain financial control.

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Strengthen Supplier and Vendor Partnerships

Strong supplier relationships are key to effective cost control. Regularly reviewing contracts, comparing quotes, and negotiating volume discounts helps stabilize pricing and reduce procurement expenses. 

Partnering with a full-service industry expert like s.t.o.p. Restaurant Supply gives restaurant owners access to the Commercial Partner Program. This comprehensive initiative supports strategic purchasing, flexible leasing, and operational planning to improve daily operations. 

Our consulting specialists, with extensive experience in the Canadian restaurant industry, help restaurateurs plan smarter, strengthen vendor networks, and sustain profitability.

Optimize Energy and Utility Use

Energy and utilities can account for 10 to 15% of a restaurant’s total expenses, but selecting the right equipment can significantly reduce these costs. Many restaurant owners report improved energy efficiency and reduced overhead after switching to 

Multi-use appliances, like the COMBI OVEN ELECT 10PAN or Ibex Rapid Cook Oven IBEX1AV3PBB, combine cooking functions in a single unit, saving energy and kitchen space. 

Pairing these appliances with LED lighting, regular HVAC maintenance, and ENERGY STAR-rated equipment can lower monthly utility costs while improving long-term operational efficiency.

Cross-Train Staff to Maximize Productivity

Labour costs often account for 20 to 30% of gross revenue. Cross-training staff reduces reliance on overtime and extra hires while increasing scheduling flexibility and service speed. 

A versatile team also fosters a more collaborative environment. It can lead to improved teamwork, consistent service during peak hours or staff shortages, and boost employee morale, which can translate to higher retention rates.

Actionable tips:

• Train employees to handle multiple stations. This builds versatility across kitchen and front-of-house roles, which becomes handy in shortages.
  

• Rotate roles to improve team collaboration. Experiencing what other roles undertake can make employees understand different functions and reduce bottlenecks.
  

• Track productivity by shift performance. Note each member’s strengths, gaps, and areas for improvement to optimize scheduling.

Optimize Your Restaurant Layout for Efficiency

An efficient restaurant layout directly impacts service speed, communication, and productivity. Poor design leads to wasted motion and longer prep times, increasing labour costs. 

For a tailored solution, consult a commercial kitchen expert from s.t.o.p. Restaurant Supply. Our team can assess your space, recommend workflow improvements, and suggest equipment placement strategies that reduce costs and boost long-term profitability.

Actionable tactics:

• Simplify kitchen workflow with clear zones: Separate prep, cooking, and playing areas to reduce congestion.
  

• Balance table capacity and server reach to ensure front-of-house flow matches staffing levels and guest volume.
  

• Keep frequently used tools within easy reach to minimize unnecessary movement and save time during service. 

Invest in Continuous Financial Review

Maintaining a healthy net profit margin of 5 to 10% requires consistent financial analysis. Reviewing profit and loss reports weekly helps identify inefficiencies and cost-saving opportunities early. 

Leveraging restaurant accounting software streamlines tracking, enabling informed decisions on expense allocation, reinvestment, and growth opportunities. Cultivating a proactive financial culture allows your own restaurant to remain adaptable if the food costs change.

Restaurant Cost Control: Equipment Expenses and Food Costs

Food and equipment are the two biggest investments in most restaurants. These costs have the strongest influence on profit margins and overall financial performance. Restaurant operators can maintain efficiency while reducing unnecessary overhead by applying smart purchasing strategies, monitoring performance metrics, and leveraging flexible payment options.

Handle Rising Food Costs Without Sacrificing Food Quality

Inflation continues to challenge Canadian restaurants. According to Toast’s Voice of the Canadian Restaurant Industry 2025 report, 85% of operators say inflation has significantly affected their business. 

Rising ingredient prices and energy costs have increased menu prices and slowed spending, but strategic cost control can help offset these pressures. 

Lease, Finance, or Buy Restaurant Equipment

Whether to lease, finance, or buy restaurant equipment depends on your restaurant’s cash flow, growth stage, and long-term operational goals. Equipment is a major investment that directly affects efficiency, maintenance costs, and return on investment. 

Working with a commercial restaurant expert at s.t.o.p. Restaurant Supply helps operators compare payment options and choose the most cost-effective strategy for their operation. Our flexible leasing and equipment financing programs, offered through EconoLease, can help provide faster access to top-brand appliances while preserving capital for staffing, marketing, or expansion.

Actionable tactics:

• Compare total ownership costs before purchasing. Consider maintenance costs, warranties, and energy consumption to identify the most cost-effective option.
  

• Lease high-maintenance or short-lifecycle equipment to avoid repair expenses and allow easy upgrades to newer models.

• Finance key appliances to preserve working capital. Financing spreads costs over time, keeping cash available for operations, seasonal adjustments, or emergency repairs.

• Schedule preventive maintenance to extend service life. Regular inspections and cleaning protect your investment, prevent downtime, and help retain efficiency.

Key Takeaways

• Track key expenses like food, labour, rent, and utilities for better financial control.

• Maintain 25-35% food costs and labour at 30–35% to protect gross profit.

• Lease high-cost equipment to preserve cash flow.

• Review operating expenses monthly to find savings.

• Invest in efficient equipment to reduce long-term costs.

• Use AI tools and smart technology to improve cost control and profitability.

Optimise Restaurant Cost Control with s.t.o.p. Restaurant Supply

Need expert help optimizing your restaurant costs? Your one-stop restaurant supply can help. Speak with a full-service kitchen consultant at s.t.o.p. Restaurant Supply to explore leasing and partner programs that reduce overhead, improve efficiency, and strengthen long-term profitability.