Profit Rescue: Using Technology to Combat Inflation & Rising Operating Costs
Thin profit margins are nothing new to the restaurant business. Even small cost fluctuations can have a big impact on the bottom line. We all know the current operating climate has been a challenging one for restaurant owners.
We face rising food inflation, increasing wages, workforce scarcity, and as a result, shrinking margins. Restaurants Canada reports that over the last two years, the average Canadian restaurant company has seen total food costs increase by 25% and labour costs rise by 18%.
Restaurant owners are absolutely feeling the pinch. As of late 2025, approximately 41% of Canadian restaurants are operating at a loss or merely breaking even. This is a stark increase from just 12% of restaurants in 2019.
So what can we do about it?
Controlling the Controllables
As Back of House tech expert Spencer Michiel explains, “Restaurants don’t get to control inflation or supplier pricing. That part is out of our hands. What is in our control is how we manage costs and protect margins once products hit our kitchens.”
Fortunately, a generation of emergent technologies is making it possible to gain far greater control over these variables. Today, we have increasingly powerful and accessible tools available for analyzing data, automating processes, spotting sources of waste, and more. And the right combination of tech-based solutions can help protect your margins even as costs rise and inflation persists.
The best part is that you may not need to go out and get a whole new set of tools. In some cases, you just need to make smarter decisions with the tools you already have. When you choose the right solutions and make optimal use of the tech you already have, you can:
Gain greater insight into your business
Make decisions with more precision
Take more control of your costs and your profit margins
Where Most Restaurants Are Losing Money
Have you ever wondered why busy restaurants sometimes go out of business? By the same token, have you ever wondered why restaurants that seem quiet all the time stay in business forever? In both cases, the answer might be the same. It comes down to cost control.
But of course, there are two primary costs in our business – goods and labour – and they both have a tendency to fluctuate wildly.
Cost of Goods (COGS)
The cost of goods (COGS) is extremely vulnerable to the effects of inflation. For obvious reasons, we often respond to the rising cost of goods by adjusting the prices on our menus. But customers have a threshold for how much they’re willing to spend. And in the face of rising costs, it can be difficult to find wiggle room in your own operation.
But there are ways to adjust your approach without passing the cost on to your customers. The key is to develop systems that limit waste. This begins with your inventory management strategy. Whether you're over-ordering from your supplier, carrying too much inventory, or losing ingredients to spoilage, there are ways to control these costs by adjusting your approach.
Labour Costs
Labour is another major pain point in our business. Rising labour costs and ever-changing minimum wage laws are a consistent challenge. And while these external factors are outside of your control, there are plenty of things you can do to lower your labour costs.
Underlying these labour costs is the stubborn issue of high turnover. While this problem is not unique to the restaurant industry, it is one of the most persistent issues that we face as owners and operators.
But we do have the power to address this issue with improved training, ongoing support, better incentives, and more efficient staffing. Not only that, but there are all kinds of affordable, user-friendly tools that you can use to accomplish these goals.
Using the Tech To Manage Food Costs
The point is that because the costs highlighted above are so susceptible to fluctuation, it is our responsibility as owners and operators to closely monitor our own food and labour costs in real time, every single day.
While it may be more challenging to keep up with rising food costs, we do have access to more sophisticated tools than ever before to do so. Advanced inventory management software can now give us real-time visibility into constantly changing food costs and usage rates. This, in turn, can provide us with deeper insight into our invoice data and true product costs.
And if we’re really taking full advantage of the technology we have, then we can forecast inventory needs with greater accuracy, make data-driven ordering decisions, and ultimately provide some insulation for our operations against price volatility and supply chain disruptions.
Using the Tech To Manage Your Labour Costs
Advanced scheduling platforms are also strengthening our ability to control labour costs by providing greater visibility into the strategies that work and those that don’t. This technology provides an antidote to “just in case” staffing – replacing this inefficient and wasteful scheduling method with more precise shift-scheduling based on real sales and labour data.
This same shift scheduling technology can also provide improved foot traffic forecasting as a way to reduce overtime creep, prevent staff burnout, and balance high-quality service with controlled labour costs.
Uncovering Your Hidden Costs
While food and labour costs are our biggest expenses as owners and operators, they are hardly our only sources of waste. Back of House AI expert Marylise Trépanier points out, “There are countless hidden operating costs that could be easily controlled with just a bit more insight and visibility.”
Marylise highlights expenses like unused software subscriptions, tech redundancies, creeping monthly software fees, and payment processing fees as a few areas where most operators have room for cost cutting.
She also points out that variables like equipment downtime and unexpected repairs, which could be easily controlled with preventive maintenance, may also be cutting into your profit margins.
Join Spencer & Marylise for a Webinar on Profit Rescue
So what’s next? How can you streamline your inventory management strategy, schedule your shifts with greater precision, and eliminate all those hidden costs that are causing waste for your business? It all comes down to choosing the right combination of tech-based solutions for your business.
Naturally, that combination will look just a little bit different for every restaurant.
Join us on March 10 for a virtual discussion on “Profit Rescue: Using Technology to Combat Inflation & Rising Operating Costs,” in partnership with Back of House, 7Shifts, and MarginEdge. This webinar will survey the restaurant tech landscape for an eye-opening discussion on how technology can protect your restaurant’s bottom line.