Before you ask, “Where do we cut costs?” ask if cutting costs is even the answer
This piece was originally shared on LinkedIn in response to recurring conversations with founders and leadership teams around this topic.
I’m publishing it here as part of an ongoing body of thinking around restaurant strategy, market entry, and operational decision-making.
I’ve been working with a restaurant group recently. The starting assumption was straightforward: revenue is down, so we need to reduce the cost base.
But first, we needed to understand the revenue.
We broke it down by daypart, mix, food versus drink, location, product mix, and average spend per guest. How had these trended? How did they compare to similar businesses? We stripped out anything localised to a specific venue and normalised for different accounting practices.
Then we looked at the cost structure. What’s fixed, and how heavily fixed? What's variable, and how flexible is that variable in practice?
We demonstrated that they can’t return to the same profit level without increasing revenue.
There isn't a cost cut possible.
This new insight changed everything. The focus is now on growing revenue without additional cost, such as through set menus, rethinking advertising, and local partnerships.
And what does this look like for operations? Break the targets into reality: if we need 10% revenue growth, what does that look like on a Tuesday? How many covers? What average spend? What can we incentivise with the team?
Once the numbers become operational, teams can actually execute on them.
The question isn’t always “where do we cut?”
Since first sharing this, I’ve seen the same issue surface repeatedly — particularly with businesses entering new markets or scaling too quickly. The underlying challenge is rarely strategy itself, but how early decisions constrain execution later.
Andrew Jobes is the founder of Jobes & Co., a Dubai-based advisory working with restaurant and hospitality businesses across the Middle East and international markets.