Can Adding a Virtual Brand Reduce Your Kitchen Labour Costs?

Restaurant owners are always seeking new ways of increasing the profitability of their kitchens. With the on-off impacts of recent nation-wide lockdowns, labour shortages and economic pressures, adding a virtual food brand has been a popular way to do this.

Combining a virtual food brand with your existing kitchen operations needs to be carefully thought through, however.

With this in mind, make sure you have a thorough understanding of your current labour costs, as well as the opportunities virtual food brands can provide…

How to calculate your kitchen labour costs

Any restaurant franchise operator knows that profit margins can be extremely tight.

To ensure success, you need to track your financial situation carefully… and a big part of this is understanding staffing costs.

To calculate true labour costs, consider more than just staff wages. You should also include:

• Salaried wages
• Hourly wages
• Incentives and bonuses
• Taxes and insurance
• Paid time off (including holidays and sickness)

Combine these totals over a designated period (for instance, weekly, monthly or yearly) – and this will be your total labour costs.

Divide this figure by your overall revenue, and you’ll have your labour cost percentage. As a rule of thumb, most restaurants operate at roughly 30%.

With a clear financial picture, you’ll be able to measure how successful any virtual kitchen brands are at reducing your labour costs.

How can a virtual food brand help your kitchen?

Virtual food brands allow a single restaurant to operate multiple food concepts from the same space.

Virtual brands are essentially digital storefronts, primarily advertised on food delivery platforms such as Uber Eats, GrubHub, Deliveroo and Just Eat. They can be created and fulfilled from existing restaurant kitchens or dedicated ghost kitchens.

On-demand food delivery is simply an expectation for today’s customers. New and exciting concepts consequently have the ability to break-through and create significant profits; allowing restaurants to improve efficiency and reduce costs.

Here are just some of the ways virtual food brands can reduce kitchen labour costs:

• Increased sales – each additional brand means an extra listing on food delivery platforms. Never over-stretch yourself or saturate the market, but do consider how extra brands could help your staff capitalise on “economies of scale”.

• Optimise your kitchen space – if your staff have the capability and space to cook more food, make the most of this. This is all about improving your ROI in terms of ingredients, equipment, space and labour costs.

• Limit food waste – if your chefs have already prepped fantastic ingredients, could they be used across multiple menus and dishes? This will improve efficiency, further reducing labour costs.

• Renting your kitchen – if you have quiet periods, could you turn your kitchen into a shared space that other virtual brand owners rent-out? It’s a great way of increasing profits without added labour costs…
  
  

Do you want to earn more from your kitchen?Peckwater Brands set you up with everything you need to run a virtual food brand. Book a call today to tell us about your business and discover how we can help.