Increase your Restaurant’s Profits
There are several steps involved in increasing your restaurant’s profit margins.
First you need to evaluate your business, or have a non-biased professional conduct an in-depth operational analysis. An operational analysis will identify any areas that need improvement and a plan of action will be delivered to you as a guide on how to implement the new procedures.
In most cases, several minor changes in your daily operations can have a significant positive impact on your overall profitability and your way of life.
Even a restaurant, bar or coffee shop that is only marginally profitable can be turned around to provide the owners a sustainable, long-term business and great quality of life. Typically the measures that have the most impact on your restaurant’s profitability rely on the basics of business management.
Basic accounting profitability equation:
Profit = Income less Expenses.
So to increase your profitability you can either increase your income or reduce your expenses. To start, lets focus on how you can increase your income.
How to Increase Restaurant Sales
There are 4 primary ways to increase sales in your restaurant.
- Increase the number of customers
- Increase customer return rates
- Increase your check average
- Owner motivation and involvement
A cumulative increase in each one of these areas can build your sales and most importantly, increase gross profits in a significant way. It is possible for a marginal percentage increase to be the deciding factor between a failing or succeeding and profitable restaurant.
There is no doubt; the combination of an increased gross profit margin and better-controlled expenses will positively impact your business’ longevity and your quality of life.
How to increase your number of customers
First, ask yourself this… what is my niche, what do we offer better than anyone else?
Identifying your marketing angle is paramount. Without the proper direction, your efforts will be pointless and costly.
Second, look at your competitors. Review their offerings, menu size, pricing, special offers, customer feedback, etc. You’d be surprised how many times owners perceptions of their competitors are incorrect. A good way to find out is to conduct a secret shopper blind study of your location and your nearest competitors.
Once you’ve identified your strengths and weaknesses, you may develop a marketing plan. This along with the proper branding will help you gain more customers in turn generating more sales. The message you send to your customers will have a lasting impression. Just remember to always live up to your promises.
There are many marketing avenues available for you to get the word out. Not every option will work, so take your time and do some research on what approach will most benefit your business. Use your resources; it doesn’t hurt to call a consultant for a free consultation either.
How to increase your check average
You have two options when increasing your income per customer. You can increase the price on key regularly sold items or increase the number of items you sell to each customer. For example, you can up-sell on high profitability items like cocktails, desserts and coffees.
Increasing item pricing
This could be dangerous and should be closely examined before implementing.
In some cases it might be absolutely necessary and won’t impact the restaurant in a negative way. But be cautious, customers generally will be upset at noticeable increases even if it’s a larger portion or better product.
The most productive and safest route is to introduce new and attractive high profit items. Menu placement, engineering and price assessment will also have positive impacts on your profitability by leading customers to the items of greater benefit.
Increasing items sold, Up-selling
Most restaurants increase their sales by up-selling or add on sales, i.e., “would you life fries with that”, “can I suggest an appetizer to start”, etc.
So what do you need to get that add on sale? You need to have attractive items available for sale, you need have a well trained staff capable of asking for or suggesting the sale and you need to position it properly, making it easy for customers to say yes. You should also have a system in place to track up-sells per server and a reward program for aditional motivation.
Get your customers to return frequently
There’s an old saying in business “a disgruntled customer won’t tell you, but they’ll tell everyone else”. Research indicates that for every complaint you receive there are 10’s if not more people that don’t complain and just vow to take their business elsewhere.
So, a good starting point is to provide exceptional customer service and natural interactions. Get to know your customer and make it easy for them to communicate with management or ownership.
These tactics will play a significant role in upgrading your customer service.
Use comment cards and guest check messages with a phone number or website where customers can express any feedback.
Encouraged customer feedback by management and via a customer incentive program.
Owner motivation and involvement
On of the most defining factors of a restaurant’s success is the motivation and attitude of the owner. This impacts not only on the energy level and achievements of the owner but also of their staff and it significantly impacts the customer’s experience.
An owner’s motivation, enthusiasm and achievement is challenged most when it’s needed, usually when things aren’t going well and improvements have to be made. It can be difficult at times to manage or turnaround a drifting restaurant stress levels are high. Not mention, the obvious tends to become not so obvious when your operation becomes a daily monotonous routine. When this happens, it’s time to call in a “new pair of eyes” to evaluate your operations and provide fresh new ideas and insight.
With the right plan of action an owner can regain confidence. In just a few steps/projects aimed at one section of the business is often all that is needed to get the ball rolling. Success with one task buys the time, motivation and resources to attempt the next task.
Summary
In summary an operational analysis of your restaurant can increase performance, daily operation efficiencies and can result in significantly increasing your income.
Your starting point should be to set your goals for increasing your income and then start acting on it. You may be surprised that you already have the knowledge inside you to make the changes needed or you may need to tap into some external resources like a professional restaurant consultant. If the latter applies, then visit www.trgrestaurantconsulting.com or call 877-777-6175 for a free consultation.
