Stefano here. I am quite proud to introduce the second post of the series “How to Open a Restaurant in Italy” written together with my colleague and friend Monica. This time you can use the information not just for a restaurant but for any food & beverage business.

One day we should merge all these articles in a very practical e-book. What do you think? In the meantime, enjoy the post!

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Cost Control in the Italian Food & Beverage Business

So, now you know how to incorporate a company in Italy, you understand how to start up a restaurant, and you are training to deal with the Italian bureaucracy. Probably you already know how to control your costs, but every country has its own critical issues, and Italy is no exception. I would like to share a few lessons I have learned in this business.

The first cost you have to manage is the rent and the license. However, in this post I am going to focus more on the costs that many business forget to control:

1. Facilities and equipment,
2. Work organization and staff,
3. Accounting and Finance.

Facilities and Equipment

Like in any other country, you should carefully evaluate the different scenarios before deciding whether to buy, to rent or to enter into a lease agreement. Don’t focus on the monthly rent of a piece of equipment. If you lease a machine for Eur 1000 with a minimum contract of 36 months, your company start with a debt of 36×1,000= Eur 36,000. This analysis is called T.O.C. (Total Cost of Ownership) as you probably know.

In Italy the law could impose a minimum length to a contract, even AGAINST the will of the parties. So – anytime the cost is crucial for your business – remember to check with your lawyer or your accountant. In fact, in Italy accountants tend to be very supportive on contract matters.

Work Organization and Staff

Staff represents the main cost centers in the Italian catering industry. National Insurance and Pension costs are high in Italy (too high) and some restaurant are used to pay part of the salary out of the book (in Italian “under the table” or “black salary”). Be careful with that, It’s not just illegal, but more dangerous than in the past.

The staff management is also more complex than in other countries. Payroll are so sophisticated – even for a waiter – that you should employ a Chartered Payroll Expert (Consulente del Lavoro) on top of the accountant. Luckily the largest part of the accountants have a Chartered Payroll Expert in the team, so you have to deal with only one person. But it’s going to be expensive.

Don’t be (too much) scared. It’s no heaven but if there are many restaurants in Italy it’s because the business is good.

Accounting and Finance

Before you open the doors of your first restaurant, take your time and a lot of patience, nag your Chartered Payroll Expert on a chair, and try to get an idea of:

1. how much you pay in taxes for each employee (and if there are tax breaks for hiring, for contract changes, etc.)
2. the food cost of each dish

At least once a month check:

1. the percentage of theft inside your store. Does it sound bad? Unfortunately this is real and cruel life!
2. the fluctuations in the price of food in the last month and their impact on your restaurant
3. the maintenance costs of your restaurant, cost of the rent and the value of the property (if you own it)

The hidden cost: Lack of quality

Last but not least, don’t forget that a disorganized team is an hidden cost. In Italy – more than in other countries – remember to keep the team always motivated and provide quite clear priorities. Could sound a cliche, but Italians are easy to heat. I have seen two chief chasing each other with knives (true story) and I can tell enough stories to shot a series of B movie. I have setup my ratio of restaurants outside Italy – including the cultural Belgium – to have prove that it’s not just Italy, it’s the business. If you want to deal with food, you should learn to deal with human passion, ad I am not speaking just about the customers.

I love a quote by Henry Ford: ” It‘s not the employer who pays wages. The employer merely handle the money. It ‘s the customer who pays the wages.”. In a restaurant your team directly manage your customer, don’t forget it!

Image source: netzkobold on Flickr.com

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