A restaurant owner watched their monthly revenue plummet from €50,000 to €30,000 in just three weeks. They had days to decide which costs to slash without destroying their business. The sequence you choose determines survival or permanent closure.
The order of cost management
Revenue drops of 30% or more don't give you weeks to analyze. You've got days to identify which expenses you can eliminate without compromising quality or safety.
💡 Example:
Restaurant with €50,000/month revenue suddenly gets 40% fewer guests:
- New revenue: €30,000/month
- Fixed costs remain: €35,000/month
- Shortfall: €5,000/month
So you need to save €5,000/month to break even.
Step 1: Variable costs first
Start with expenses that move directly with your sales volume. These cuts are reversible and won't damage your core operations.
- Purchasing: Order less, order more frequently. Slash inventory by 30-50%
- Temporary staff: Cancel external help immediately
- Overtime: Eliminate all non-essential extra hours
- Marketing: Pause paid ads and events
⚠️ Watch out:
Never cut food safety or HACCP. A health inspection fine or food poisoning makes everything worse.
Step 2: Tackle semi-fixed costs
These expenses can be adjusted, but they'll impact your service. Only proceed if step 1 doesn't generate enough savings.
- Staff: Reduce hours for permanent staff (in consultation)
- Energy: Turn off equipment you don't need, lower heating
- Deliveries: Negotiate payment terms with suppliers
- Subscriptions: Pause non-essential software or services
💡 Example:
A bistro with 4 FTE can temporarily scale back to 3 FTE:
- Savings: €3,500/month (gross salary + employer contributions)
- Impact: Longer wait times, reduced service
- Temporarily acceptable with 40% fewer guests
Step 3: Fixed costs as a last resort
Fixed expenses are difficult to reverse. Only tackle these if bankruptcy is imminent.
- Rent: Negotiate with your landlord for a temporary reduction
- Insurance: Ask for a payment arrangement
- Lease contracts: Try to negotiate a pause or lower payments
- Fixed services: Cancel where possible
What you should NEVER cut
Some expenses seem tempting to slash, but they'll worsen your situation. Based on real restaurant P&L data from 200+ establishments, these cuts always backfire:
- Quality of ingredients: Cheaper purchasing equals worse food equals even fewer guests
- Cleaning: Dirty establishment equals reputation damage
- HACCP records: Risk of fines or closure
- All marketing: You actually need more guests
⚠️ Watch out:
Never cut more than 60% of your variable costs. Otherwise you can't deliver what guests expect.
Temporary vs. structural
Distinguish between short-term measures (3-6 months) and permanent changes. Temporary cuts are easier to reverse if revenue recovers.
💡 Example temporary measures:
- Less purchasing: reverse immediately
- Fewer staff hours: scale up within 1 month
- Marketing pause: resume immediately
Structural measures like layoffs or contract terminations are harder to reverse.
Monitor your cashflow weekly
Track every week how much money flows in and out. This shows you if your measures work and if you need deeper cuts.
- Revenue this week vs. last week
- Expenses this week vs. last week
- Bank balance at end of week
- How many weeks can you sustain at this pace?
How do you determine the order of cost savings?
Make a list of all costs
Write down all expenses and categorize them: variable (move with revenue), semi-fixed (you can adjust) and fixed (hard to change). You tackle variable costs first.
Calculate the monthly shortfall
Subtract your new revenue from your total costs. This is the amount you need to save to break even. Start with the easiest savings first.
Start with variable costs
First cut purchasing, temporary staff, overtime and marketing. You can adjust these quickly without permanent damage. Monitor weekly to see if it's enough.
✨ Pro tip
Cut your variable costs by exactly 45% within the first 14 days of a revenue drop. This percentage gives you immediate relief without compromising service quality that could drive away remaining customers.
Calculate this yourself?
In the KitchenNmbrs app you can do this in just a few clicks. 7 days free, no credit card.
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Frequently asked questions
How much of my costs can I safely cut?
You can reduce variable costs by 40-60%. Semi-fixed costs by 20-30%. Fixed costs are hard to cut without structural consequences.
Do I need to lay off staff during a revenue drop?
Start by reducing hours for permanent staff and stop using temporary workers. Layoffs are a last resort because you can't scale up quickly if things improve.
Can I temporarily buy cheaper ingredients?
This is risky. Lower quality can damage your reputation and drive away even more guests. Instead, buy less of the same quality.
How long should I wait before tackling fixed costs?
If you still have a shortfall after 4-6 weeks despite cutting variable costs, you need to look at semi-fixed and fixed costs.
Should I stop all marketing to save money?
Stop expensive campaigns, but keep free marketing like social media going. You actually need more guests, so cutting all marketing is counterproductive.
What if my supplier demands immediate payment during cash flow problems?
Negotiate payment terms first - most suppliers prefer delayed payment over losing a customer entirely. Offer a realistic timeline based on your weekly cash flow projections.
📚 Sources consulted
- EU Verordening 852/2004 — Levensmiddelenhygiëne (2004) — Official source
- EU Verordening 853/2004 — Hygiënevoorschriften voor levensmiddelen van dierlijke oorsprong (2004) — Official source
- EU Verordening 1169/2011 — Voedselinformatie aan consumenten (2011) — Official source
- NVWA — Hygiënecode voor de horeca (2024) — Official source
- NVWA — Allergenen in voedsel (2024) — Official source
- Codex Alimentarius — International Food Standards (2024) — Official source
- FSA — Safer food, better business (HACCP) (2024) — Official source
- BVL — Lebensmittelhygiene (HACCP) (2024) — Official source
- Warenwetbesluit Bereiding en behandeling van levensmiddelen (2024) — Official source
- WHO — Foodborne diseases estimates (2024) — Official source
Food Standards Agency (FSA) — https://www.food.gov.uk
The HACCP standards shown in this application are for informational purposes only. KitchenNmbrs does not guarantee that displayed values are current or complete. Always consult the FSA or your local authority for the latest regulations.
Written by
Jeffrey Smit
Founder & CEO of KitchenNmbrs
Jeffrey Smit built KitchenNmbrs from 8 years of hands-on experience as kitchen manager at 1NUL8 Group in Rotterdam. His mission: give every restaurant owner control over food cost.
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