Cost Cutting Strategies for Restaurants and Cafés in Saudi Arabia

The fastest way to reduce restaurant costs in Saudi Arabia is to work on prime cost first: what you spend on food and drink ingredients plus what you spend on the people who prepare and serve them. Those two lines usually decide whether a restaurant or café makes money. Cost every recipe, compare what your sales say you should have used with what you actually used, log waste, drop the items that sell little and earn little, and schedule staff to your real busy hours within the Labor Law. Then turn to delivery app commissions, rent, energy and marketing, and tighten cash control at the till. Two things stay off the cutting list: licenses, health and food safety, and the quality your customers come back for.

Start with prime cost, measured every week

General cost advice tells you to map all your costs, and our guide to a cost reduction strategy for Saudi companies explains how. In a restaurant, that map has a clear center. Food and beverage cost and labor cost together make up prime cost, and most of what you can control sits there, because it moves every day while rent is fixed by the lease.

Restaurants that control prime cost look at it weekly, not when the accountant closes the month. A monthly figure arrives too late: by the time you see that food cost jumped, a whole month of heavy portions or spoilage has gone by. A weekly view needs only a few things:

• Sales for the week from the point-of-sale system, by item and by channel: dine-in, takeaway and each delivery app separately.
• Purchases for the week from supplier invoices, and the change in stock from a count of your main items.
• Hours worked and the labor cost of those hours, including overtime.
• Waste logged during the week.

Food cost is opening stock plus purchases minus closing stock, set against food sales. There is no single right percentage for every concept. What matters is your own trend, and the gap between your actual cost and the cost your recipes say it should be. If your accounts cannot produce this view every week yet, set that up first through proper financial and management reporting.

Food cost and waste

Cost every recipe and fix the portions

Every item on the menu needs a standard recipe card: each ingredient, the exact quantity, the usable yield and the current purchase price. That gives you the theoretical cost of each plate or cup. Then make the recipe the rule in the kitchen: scales at the prep station, portion scoops and ladles, pre-portioned proteins, and a photo of the correct plate at the pass. Over-portioning is rarely dramatic. It is a little extra rice, an extra slice of cheese, a heavier pour of sauce, repeated hundreds of times a week.

Compare theoretical and actual food cost

Multiply what you sold by the recipe cost of each item, and you have what food should have cost you. Compare that with actual food cost from purchases and stock counts. A small gap is normal. A wide or growing gap points to heavy portions, waste nobody records, staff meals that are not tracked, theft, or short deliveries from suppliers. Check the gap item by item for your most expensive ingredients, such as meat, seafood, cheese and coffee.

Keep a waste log

Waste you do not record cannot be reduced. Keep a simple log at each station: what was thrown away, how much, and why, whether spoilage, overproduction, a dropped plate or a dish sent back. After a few weeks the patterns show: a sauce made in batches too large for weekday demand, bread ordered for the weekend that is stale by the first working day, a salad item that spoils before it sells. Then fix the cause: smaller prep batches, prep levels set for each day of the week, and first-in, first-out storage with clear date labels.

For cafés: milk, beans and cups

A café’s cost structure is different from a restaurant’s. Coffee beans, milk, and disposable cups and lids are the main variable costs, and the waste is quieter: milk steamed and poured away, shots pulled while dialing in the grinder, beans going stale in an open hopper, cups given away or damaged. Train baristas to steam only what each drink needs, record the coffee used for calibration, buy beans in quantities you will use while they are fresh, and count cups and lids along with the rest of the stock.

Menu engineering and pricing

Menu engineering means judging every item on two things at once: how much it earns per sale after its ingredient cost, its contribution margin, and how often it sells. Those two measures put each item in one of four groups:

• Popular and profitable: protect them, keep the recipe consistent and give them the best place on the menu.
• Popular but low margin: review the recipe, the portion, the choice of ingredients and the price before anything else.
• Profitable but unpopular: move them on the menu, rename them, describe them better, or train staff to recommend them.
• Unpopular and low margin: remove them, unless they serve a specific purpose such as a children’s option.

A shorter menu usually cuts costs in more than one place: fewer ingredients to stock, less spoilage, faster prep, simpler training and more consistent plates. Look for ingredients used in only one dish; they are often a source of waste.

An illustrative example: a family restaurant finds that its mixed grill platter is one of its best sellers, but once the recipe is costed at current meat prices, it earns less per sale than a simple chicken dish. Instead of a sharp price rise, the owner adjusts the mix on the platter, reduces a side dish most customers leave, and raises the price slightly. The platter stays popular and its margin recovers.

Raising prices with care

When ingredient prices rise, a price increase is sometimes unavoidable. Make it selective rather than across the board, starting with popular items whose margin has fallen. Remember that the prices you display to customers must include VAT, so set prices on the full amount the customer pays and work out your margin after VAT, not before.

Suppliers, ordering and storage

• Specify what you buy. Write a specification for each key item: cut, grade, size, pack, and origin where it matters. Without one, you cannot compare quotes, and you cannot reject a delivery that is below standard.
• Compare two or three suppliers for key items, and review prices regularly, especially for meat, poultry, dairy, oil and coffee. Ask about volume terms, delivery frequency and minimum orders.
• Negotiate payment terms, not just price. Agreed credit terms instead of cash on delivery can ease cash flow, but only if you pay on time; a supplier who is paid late stops offering good prices.
• Order to set stock levels. Set a target level for each item by day of the week and order the difference. This prevents shortages and the habit of ordering a little extra to be safe. Bulk buying saves money only if you have room at the right temperature and will use the stock before it expires.
• Check every delivery against the order and the invoice: weight, count, temperature and expiry dates. Short deliveries and wrong items are a silent cost.
• Plan for disruption. Regional crises can delay shipping and push up the price of imported ingredients. For imported items that matter to your menu, know a local or alternative supplier, and order ahead of the Eid holidays, when many suppliers pause deliveries.

Staff scheduling within the Labor Law

Labor is the other half of prime cost, and the biggest savings here come from matching hours to demand, not from paying people less. Never cut pay or change hours or terms on your own: any change to an employee’s pay, working hours or contract terms needs the employee’s written agreement and must follow the Labor Law, and a lawyer should review any specific case.

Schedule to your real busy hours

Use point-of-sale data to see sales by hour and by day. Most restaurants have clear peaks around lunch, dinner and weekend evenings, with quieter spells in the afternoon. Build the rota around those peaks, within the working hours, rest periods and weekly rest day that the Labor Law and each employee’s contract set, and pay overtime when it is worked. Stagger start times so the whole team is not on the floor long before the rush, and cross-train staff: a cashier who can run food, or a prep cook who can cover the grill, lets a leaner shift still give good service and lowers the cost of absence.

Plan for the seasons

Demand in Saudi restaurants and cafés moves with the calendar. In Ramadan, trade shifts to iftar and suhoor, the daytime pattern changes completely, and the Labor Law sets shorter working hours for Muslim employees, so the rota and the prep plan need to be rebuilt for the month, not adjusted day by day. Eid brings peaks for some concepts and closures at suppliers. Summer, school holidays, seasonal events and tourist seasons move demand up or down depending on your city and location. Plan staffing for each season in advance instead of recruiting in a hurry.

Count the full cost of each hire

Each additional employee costs more than a salary: GOSI contributions, health insurance, the end-of-service benefit and, for non-Saudi staff, residency and work permit costs, plus the health certificates that staff handling food need. The sector also has its own Saudization requirements, so check your classification on Qiwa before you change the team. If payroll and HR paperwork take more of your manager’s time than the restaurant can spare, HR outsourcing can take that administration off the floor.

Delivery apps and marketing: pay only for orders that make money

Delivery apps bring orders a restaurant could not reach alone, but each order carries costs that dine-in does not: the app’s commission, packaging, any promotions you fund, and refunds for missing or late items. Work out the margin of each delivery item after all of these; some dishes that are profitable in the dining room lose money through an app.

• Read each app contract for the commission, marketing fees, promotion funding, payout timing, and how refunds and disputes are handled.
• Build a delivery menu of items that travel well and still earn enough after commission. If you price delivery items differently from the dining room, check the app contract and the current consumer protection rules, and show the price clearly.
• Join promotions only after you have calculated what they cost you per order, and stop the ones that bring orders at a loss.
• Reconcile every payout against your own order records. Commissions charged on the wrong amount, refunds you did not agree to and missing orders add up.
• Encourage regular customers to order from you directly, by phone or through your own channel, where you keep more of the margin. If you do, count the cost of your own drivers or delivery service honestly.

Marketing spend

Restaurants spend on social media ads, influencers, promotions and loyalty programs, often without knowing what each one returns. Give every campaign a way to measure it, such as a code, a dedicated offer or a tracked link, and compare the orders and margin it brought with what it cost. Before paying an influencer, check that they hold the advertising license the media regulator requires. Some of the most useful marketing costs little: a complete, accurate listing on map apps with current hours and photos, prompt replies to reviews, and consistent food that brings people back.

Rent, energy and equipment

Rent and location

Rent is usually the largest fixed cost, and it is decided before the restaurant opens. For an existing site, the room to save is in the lease: at renewal, negotiate the increase, the length of the term and any rent-free period for refurbishment. In malls, read the whole cost of occupancy, not only the base rent: service charges, marketing contributions and any rent linked to sales. If a large share of your orders comes through delivery, a smaller site, a kiosk or a delivery-only kitchen may serve part of your demand at a lower rent than a full dining room. When you open a new site, compare locations on the sales you can realistically expect, not on footfall alone.

Energy and water

Kitchens run cold rooms, fridges, freezers, ovens, fryers, extraction hoods and air conditioning for long hours, and the Saudi summer makes the cooling load heavy. Practical steps:

• Switch equipment on in stages according to the prep plan, instead of turning everything on at opening.
• Keep cold room and fridge doors closed, replace worn door seals and keep condenser coils clean.
• Service air conditioning and extraction regularly; dirty filters make the motors work harder.
• Switch off lights and screens in closed sections, fix dripping taps, and check dishwashing routines for water use.

Equipment and maintenance

A broken fridge costs the repair and the stock inside it. Preventive maintenance on refrigeration, coffee machines, grinders, fryers and dishwashers costs less than emergency call-outs and lost service. When buying, compare running costs, the warranty and the availability of spare parts and service in your city, not just the purchase price. For some items, leasing or buying good used equipment can preserve cash, especially for a new café.

Licenses and food safety: the costs you never cut

Some costs protect your right to operate, and cutting them is a false saving. A closure or a penalty after an inspection costs far more than the compliance it was meant to save.

• Municipal licenses, issued and renewed through the Balady platform, and the health certificates required for staff who handle food.
• Food safety: correct storage temperatures, cleaning schedules, pest control, handwashing, and safe handling of allergens.
• The safety requirements of the Civil Defense, including fire safety equipment and its maintenance, especially around kitchen hoods and gas.
• Any menu information requirements that apply to your outlet, such as calorie information.
• ZATCA obligations: VAT registration where it applies, VAT returns, and a point-of-sale system that issues electronic invoices meeting ZATCA’s e-invoicing requirements.
• GOSI registration and the wage file on Mudad for every employee.

What you can do is manage these costs well: keep one calendar of every renewal and expected inspection, renew on time to avoid penalties, and choose cleaning and pest control contracts on scope and record-keeping, not on price alone. Requirements differ by activity and city, so check the current rules with the authority responsible for your outlet, and see our restaurants and cafés sector page for the compliance, accounting and payroll support we offer the sector.

Cash control and the mistakes that cost the most

Cash control at the till

Restaurants handle many small transactions through several channels, which makes leaks easy to miss. A daily routine closes most of them:

1. Close each till at the end of every shift: count the cash, print the shift report and record any difference with the name of the person responsible.
2. Reconcile card sales in the point-of-sale system with the settlements your bank or payment provider pays into your account, and check the card acceptance fees charged.
3. Reconcile each delivery app’s payout with your own order records.
4. Review voids, discounts, refunds and complimentary items by employee every week.
5. Set a clear staff meal policy, and record staff meals in the point-of-sale system.
6. Count high-value stock such as meat, coffee and premium ingredients every week, and look into any difference.
7. Keep the business bank account separate from personal accounts, and set aside the VAT you collect, because it belongs to ZATCA, not to the restaurant.

Common mistakes

• Cutting ingredient quality on the signature dishes customers come for.
• Cutting staff on the busiest shifts, so service slows and sales fall.
• Discounting to fill quiet hours without checking the margin on the discounted sales.
• Opening a second branch before the first one’s costs are under control.
• Putting off equipment maintenance until a breakdown ruins the stock.

For the general methods behind these steps, from supplier terms to overheads, see our guide on how to reduce operating costs without hurting the business.

Frequently asked questions

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