Unfortunately, the hospitality industry can be fickle. Several external factors can affect the profitability of your business which is why you need to take advantage of the factors that you do have control over. Luckily by implementing a few simple strategies, you can help to increase your profit margin and make your business more successful. So let’s get into how to make your restaurant more profitable.
Reduce Your Food Costs
Obviously, food costs often constitute one of the largest expenses for a restaurant. This means that theft, misuse, mistakes, and poor inventory management can all eat your profit margin – pardon the pun. You can take steps to mitigate this. First and foremost, you could work with your supplier or find new suppliers to procure your ingredients for less money without compromising quality. When it comes to your in-house processes, it is all about working with your staff to ensure that they have the training needed to lower wastage. Talk about organizing your ingredients to ensure that the older things get used first before they expire. Consider reducing portion sizes on dishes that often come back unfinished.
Reduce Your Overheads
Several other overheads within your restaurant could be affecting your profit margin. The best thing you can do to reduce your overheads is to focus on hiring the right people and training and treating them well. If your staff is trained properly, you often need less staff. It will also mean fewer mistakes are made, and your staff will want to stay with you. In addition to this, you should also consider conducting an energy audit to see if there are any areas within the business where you could save more energy. This means looking for air leaks, limiting the amount of time the refrigerator lies open or turning the thermostat off an hour before closing. In doing so, you could save hundreds in utilities over time.
Work On Your Front of House Processes
First impressions count, as mentioned above, and your restaurant provides that impression your front-of-house team contributes to. You need to ensure that your host is polite and hospitable. They need to make customers feel welcome. This means opening and closing the door for them, showing them to their seats, and introducing their wait staff to them. Customers can make or break your business; they need to be treated well. Reviews can greatly impact your restaurant; therefore, prioritizing the customer’s experience matters.
Define Your Consumer Base & Cater to Them
Consider your restaurant; who is your main customer base? For example, a business that serves what could be considered as fast food has no business offering fancy dishes with hard-to-provide names or small portion sizes. Do all of your dishes sell well? If not, there might be a reason. Rework your menu and either remove or revamp dishes that don’t sell well. Catering to the tastes of your main consumer base is the best way to maximize your revenue.
Install a Good POS
Choosing and installing the best POS system for your restaurant can go a long way in helping you to reduce your operating costs to be profitable. A POS can help you manage your inventory and ordering system to analyze the items on the menu to determine which ones sell the best vs. the ones that don’t. A good system can also inform your menu pricing practices. In fact, menu pricing can profoundly affect your profit margin as a whole; Yelp has some helpful resources for pricing your restaurant well and the other tools they provide for restaurants to be profitable. A decent POS system can also help you minimize wastage and track your employees clocking in and out. This is why you might want to consider investing in a better POS.
Build an Online Presence
If you do not already have a website, you should consider creating one. On your website, you should list your menu, hours of operation, address, and how potential consumers can contact you – this usually means a phone number and an email address. You could also create profiles on social media sites. They can help you grow your following and build a community of foodies. Social media accounts are free to set up, so are websites if you have the know-how. Otherwise, you might have to pay to get the website set up, but after that, there are little to no costs associated with the upkeep or maintenance of your site.
Offer a Takeout Service
Offering a takeout service is a good way to drive sales without requiring extra table space or opening hours. Many people prefer to take their food out and eat it at their desks or their homes; unfortunately, a lot of customers simply don’t have the time to dine out as they used to. So, by starting to offer takeout, you are widening your consumer base. That being said, there are a few costs associated with offering a takeout service like the equipment needed to package the food safely and allow your customers to consume it on the go if needed.
Offers, Specials & Coupons
To improve your profitability, you need to bring more customers in. Sometimes, you have to spend money to make money to bring customers in. Customers love to feel as though they are getting the most for their money; they want to feel that they are getting a good deal. This is why you should consider the deals that you are offering. Promotions, coupons, offers, or specials are all great options. Realistically, however, you do need to ensure that whatever method you choose will bring in more customers and more money as opposed to eating into your profit margin further.
The Bottom Line
Improving the profitability of any business can take time. You need to be patient; first and foremost, it might take a while to work out which of the above or which combination makes the most sense for your business/restaurant to be profitable. You might not have enough time or money to implement all of the techniques immediately, but they can form the basis of a more long-term profitability plan.
Featured Image by Pixy.org
