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  • Writer's pictureDominic Tam

5 Things New Restaurants Typically Overspend On

Food establishments – restaurants, cafes, bars, and even entire new-age hawker centres – are sprouting all across Singapore as quickly as others are closing. To a restaurateur, this means there’s certainly money to be made in the F&B industry, but the pressure of high costs, amongst many other challenges a business might face, weighs heavy.

Keep a lid on the costs of operating your new restaurant without reducing the quality of your customers’ dining experience with these tips.

1. Ingredient Costs

So, you’ve just launched your restaurant and are still testing the response to the dishes on your menu. A kitchen’s worst nightmare: wasting money on a ready supply of ingredients for a dish that nobody’s ordering.

And the food gods forbid that dish be lobster.

But you don’t have to start out with leaving guest preference to chance – a well-designed menu strategically directs a customer’s attention to specific dishes, increasing the likelihood of them ordering it. It’s not just about pushing your best-sellers – being able to more accurately predict the demand for each dish means you can better manage your ingredient orders.

And the psychology behind designing a menu goes beyond, say, using a thumbs-up icon to mark out recommended dishes. A sneaky trick: Where your most expensive, treat-yo’self dish is on the menu, place a more affordable item you’d want to promote directly below it. The former serves as a decoy, influencing your customers to drop their gazes to the menu item right beneath it.

2. Labour Costs

Whether it’s on the front line or at the back-of-house, tons of high-tech solutions streamline operations to boost labour productivity and save time – and time is money. Mobile technologies decrease the labour-intensiveness of compiling sales records; smart refrigerators are programmed to take stock of what’s on its shelves, taking the manual work out of managing the inventory.

3. Marketing Costs

(Left image: The chefs of Whitegrass in a celebratory embrace with the Michelin man after earning a coveted Michelin star / Right image: Celebrity Shane Pow with his restaurant venture, MOJO Singapore)

According to digital marketing agency We Are Social, a whopping 77% of Singaporeans are active users of social media in 2017 – and it’s a number that’ll just keep growing. With such a vast audience available on these platforms, it makes sense to allocate a significant budget to digital marketing efforts, right?

Not exactly.

With all the complex social media algorithms and glossy marketing techniques, it’s easy to forget that social media is, first and foremost, social. While there is value in paid marketing, even the snazziest fine dining restaurant should showcase a more human, personal side of themselves – and who better to do that than yourselves?

Share a smiley, candid moment of your bartender doing his magic behind the bar. A behind-the-scenes peek at a new dish your kitchen is experimenting with. Anything fun or funny that your customers would want to be a part of. Instagram Stories works particularly well as you can do away with the professionalism and be a little more casual.

You’re not doing target marketing or campaign management as conventional marketers understand it, but whatever audience you do reach, the level of engagement is deep and feels much more intimate.

4. New Equipment Costs

The bad news: Shiny new restaurant equipment costs a bomb. The good news: Shopping for second-hand options can save you a good amount of initial capital.

Don’t buy new if you don’t have to. For a fraction of the price, you’ll find used commercial kitchen equipment, from coffee machines to grillers, on platforms such as or even Gumtree. (That said, do be sure to examine the products carefully and check details like their warranty period.)

Once operations are more well-oiled, you can slowly invest in buying newer equipment for your kitchen if need be.

5. Decorating Costs

A well-designed restaurant sets the tone for your customers’ dining experience (and it’s free publicity when people post it on Instagram!). That said, a memorable restaurant ambiance is achievable even without spending a fortune.

Want your restaurant to be made for Instagram? Focus on a few high-impact elements to give one specific space of your restaurant a distinct personality. Do up that one space, and Do. It. Good. You’ll be directing everyone’s camera lenses to that single part of your restaurant, building an iconic visual identify for your brand on social media.

Just starting out in F&B gives you the flexibility to tweak things as you go, and bolder ways to tackle rising costs build a more resilient business that’s made to last in Singapore’s competitive F&B climate. There’s no singular recipe to a successful restaurant, but there’s every reason to keep costs to a minimum.

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