Is your cost of sales good? Great! Now – let’s reduce it.

At TORO, we believe that efficiency is an essential part of proper restaurant management. One of the main areas we focused on throughout the years as managers was reducing cost of goods and improving profitability from the raw materials already available in the restaurant, including food, beverages, and even dry goods.

In reality, almost every restaurant has money “left on the floor.” Inaccurate work habits, daily operational pressure, lack of control, and processes that have not been reviewed over time can all damage profitability without anyone noticing it in real time.

Most managers are deeply occupied with daily operations, leaving very little time to stop and examine whether inefficient routines or problematic habits have gradually become part of the workplace culture.

At TORO, we know exactly where these losses usually hide, simply because we have spent the last decade looking for them. Here are some of the key areas where we recommend starting:

Inventory Counts

Accurate, consistent, and regularly updated inventory counts are one of the most important tools in controlling costs. It is not enough to ask the kitchen or bar manager to complete inventory counts.

The data must also be analyzed carefully, unusual numbers should be reviewed, questions should be asked, and management should demonstrate genuine involvement in the process.

The truth is that very few people enjoy counting inventory and entering data into spreadsheets. This is exactly why active management involvement reduces mistakes, increases accountability, and creates a more reliable picture of the business.

Strong inventory practices also allow restaurants to make better decisions regarding pricing, purchasing, menu updates, and overall product usage.

Work Habits and Receiving Procedures

It is important to clearly define who is responsible for receiving deliveries and what procedures should be followed during the process.

If procedures already exist, management should regularly verify that they are actually being implemented consistently and not simply written down somewhere.

There are several critical areas worth paying close attention to:

Bulk products that require accurate weighing, invoice errors involving quantities or pricing, proper handling of returned products, and making sure credit notes are received from suppliers.

Small mistakes that repeat themselves daily can eventually become significant financial losses.

Shrinkage Reports

Shrinkage reports make it possible to clearly identify which products, categories, or departments are losing money. These reports are especially valuable because they connect inventory data with day to day operational reality.

The most important part is not only generating the reports, but reviewing them consistently. For some restaurants, a weekly review is appropriate, while for others a monthly review may be enough. The frequency depends on the size of the business, operational volume, and management goals.

When high shrinkage levels appear, it is important to investigate the source of the issue. Common reasons may include operational mistakes, excessive waste, inaccurate pouring, pricing problems, or lack of operational control.

Separating Profit Centers

In larger operations, especially restaurants that also include event spaces or additional business activities, it is worth considering separating profit centers within the P&L reports.

When revenue and cost of goods are analyzed separately for each space or department, it becomes much easier to understand what performs well, which areas are more profitable, and where efficiency improvements are needed. More accurate analysis leads to better decision making and stronger long term performance.