For restaurant organizations, managing profitability goes well beyond tracking prime costs. While food, beverage, and labor dominate attention, experienced finance teams know that meaningful EBITDA expansion often comes from optimizing other expense lines that can have a significant impact on the bottom line. These costs are frequently treated as fixed, but in practice, there is often more control and opportunity than it appears.
Below are five key expense categories, along with practical strategies to improve performance.
1. Occupancy Costs (Rent, CAM, & Utilities)
Occupancy is typically one of the highest fixed costs, but it should still be actively managed at both the unit and portfolio level.
How to improve:
- Conduct annual CAM reconciliations and audits. Errors and overallocations are not uncommon, particularly in multi-tenant centers.
- Track occupancy as a percentage of sales and monitor trends alongside sales per square foot to identify underperforming locations.
- Use energy management systems to standardize HVAC and lighting schedules, reducing unnecessary usage during non-peak hours.
- For multi-unit operators, use portfolio performance in lease renewal discussions to negotiate more favorable terms or concessions.
2. Payment Processing Fees
Processing fees scale directly with revenue and are often under-scrutinized despite their impact on margin.
How to improve:
- Benchmark effective processing rates across locations and renegotiate annually based on total volume.
- Move toward transparent pricing models (e.g., interchange-plus) to better understand true costs.
- Audit monthly statements to identify hidden fees, pricing creep, or misclassification of transactions.
- Align payment strategy with channel mix—dine-in, online ordering, and kiosks may carry different cost implications.
3. Technology & Systems
Restaurants increasingly rely on a wide range of technology platforms, which can create cost and complexity.
How to improve:
- Evaluate the total cost of ownership across systems, including user licenses, support, upgrades, and operational inefficiencies.
- Identify redundant tools and eliminate unnecessary overlap across platforms.
- Leverage scale – larger operators can often negotiate better pricing, support terms, or bundled agreements.
- Ensure full utilization of existing systems (reporting, forecasting, inventory features) before adding new tools.
4. Repairs, Maintenance, & Asset Lifecycle
In high-volume environments, equipment uptime is critical, and reactive maintenance is costly.
How to improve:
- Standardize preventative maintenance programs and track compliance consistently.
- Analyze repair trends by asset type to determine when replacement is more cost-effective than continued repairs.
- Negotiate regional or portfolio-wide agreements with service vendors to improve pricing and response times.
- Align capital planning with operational data to smooth large repair expenses and reduce downtime risk.
5. Third-Party Delivery Commissions & Channel Economics
Delivery is a meaningful revenue driver, but commissions can significantly dilute margins if not actively managed.
How to improve:
- Evaluate delivery using contribution margin, not just top-line sales, factoring in commissions, packaging, and incremental labor.
- Benchmark performance across platforms and locations to identify which channels are truly accretive.
- Apply strategic menu pricing and mix optimization to help offset commission pressure.
- Focus on operational execution, specifically order accuracy, speed, and packaging, to reduce refunds and protect margins.
- Invest in first-party ordering channels to improve long-term customer economics and reduce reliance on third parties.
Final Thoughts
For restaurant finance teams, the opportunity is not simply to reduce costs, but to manage them with the same rigor applied to prime expenses. These categories may seem uncontrollable, but they benefit from disciplined benchmarking, regular auditing, and ongoing negotiation. Just as importantly, aligning employee incentives with these cost drivers, such as tying management bonuses to controllable expenses, efficiency metrics, or contribution margin targets, can reinforce accountability at the unit level. Over time, incremental improvements across these areas can compound, strengthening unit economics and driving more resilient, scalable profitability.
If you have questions or need assistance, reach out to GBQ or a member of the firm’s restaurant services team for assistance.
