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12 Ways to Increase Restaurant Profitability

Running a restaurant is one of the most rewarding jobs. It can also be one of the most challenging. Countless factors play a role in a restaurant’s success or failure. The most important deciding factor is profitability

By Sebastien Sepierre|Jan 20, 2020|4:44 pm GMT

Running a restaurant is one of the most rewarding jobs. It can also be one of the most challenging. Countless factors play a role in a restaurant’s success or failure. The most important deciding factor is profitability. A restaurant can do excellent business regularly, but if they are losing money in the process or not taking advantage of opportunities to lower costs, then they are at risk for financial challenges. These 12 simple tips can help your restaurant increase profitability, decrease waste, and out-perform the competition.

 1.  Offer Delivery Services or Takeout Options (Source: FitSmallBusines.com)

An easy way to boost sales is by offering delivery and takeout. Today’s consumers are busy people who want a variety of choices when ordering food. Takeout is the simplest to implement. Restaurants already have everything they need to complete a takeout order and prepare them in to-go containers. Whether takeout or deliver, your customers want their order ready at the time they were. To cut back on potential issues here, consider implementing delivery within a specific radius of your locations to ensure the food is delivered on time and still warm.

2.  Decrease the Amount of Employee Turnover (Source: FitSmallBusines.com)

The restaurant industry is notorious for high turnover. In fact, the average tenure of a restaurant worker is less than 2 months. Each time an employee leaves, it costs the restaurant time and money to train and replace them. Additional losses often include uniforms that exiting employees take with them.

Retaining employees is a constant challenge in the hospitality sector, but one that is worth the effort. Leveraging the right software can help busy managers schedule employees and efficiently handle payroll, saving time. The use of technology helps employees engage with their employers by allowing them to input their availability personally, request days off, and view their payslips.

3.  Streamline Efficiency and Cut Down on Waste (Source: Business.com)

Unnecessary waste of food and paper products adds up quickly and costs your restaurant a significant amount of money. It’s important to evaluate what consumers and employees are throwing away as these findings can signal a need to change the portion size, modify ingredients, or streamline an inefficient process.

Most restaurants have procedures for almost every activity. This is meant to create consistency regardless of who is performing the task. Use an analytics tool to figure out which procedures work and which need work. If there are consistent problem areas that waste employee time, then the procedure should be updated to cut out unnecessary steps. The ideal process is defined as precise steps with no wasted time.  Better managing employee time increases overall productivity.

4.  Make Sure the Menu has a Selection Appealing to the Target Audience (Source: Full Service Restaurant News)

A stagnant, outdated menu will not draw in new customers. The existing customers might love it, but in order to expand the business and increase profits, a restaurant will need to attract new clientele, too. Identify and study the target market to find likes, dislikes, and trends. Use that information to create a menu that retains regulars’ favorites and entices new guests to visit. A rotating weekly or daily special can be something that customers look forward to at each visit. These menu items can feature seasonal produce or can be a way to help move an over-ordered ingredient.

5.  Have an Accurate Record of Inventory (Source: Forbes)

Paper inventory is an outdated system that leaves a lot of room for error. Inaccuracies lead to unnecessary purchasing and an overstock of goods that could spoil. Mobile counting apps or software can create a digital inventory that is much easier to manage. A digital inventory makes it easy to see what is needed (and in what quantities), when it is time to place the next food service order.

6.  Make Sure the POS System is Accurate (Source: Full Service Restaurant News)

An inaccurate POS system can cause losses and decrease customer satisfaction. Also, prices need to be accurate for the restaurant to maximize sales. Accuracy is also important to customers who are expecting the price of their meal to match the menu price. Updated technology can streamline the POS process from putting in orders more quickly and efficiently to creating the ticket accurately for the customer. This will save your staff time by limiting discrepancies and will limit customer confusion and frustration.

7.  Ensure Your Technology is Up-to-Date (Source: FitSmallBusines.com)

Technology is integrated into almost every part of daily life. Consumers use technology for work, play, and to balance their home life. A recent study uncovered that 73% of diners think technology enhances their dining experiences, too. Customers enjoy technology used in restaurant settings, and it can be worth the investment if it brings in new customers and increases positive word-of-mouth. The creation and use of a mobile app are another key element to modernizing a restaurant. An app can build interest in the menu, show restaurant announcements, and be used to order delivery or takeout and boost sales.

As mentioned above, an updated POS system is an essential piece of technology for restaurants. An effective POS system should be able to communicate with office operations so you are able to able to manage a restaurant more efficiently.

8.  Utilize Social Media for Marketing and Branding (Source: Business.com)

The best and cheapest way to advertise is online through social media outlets like Facebook, Instagram, Google My Business, YouTube, and Twitter. Consumers routinely check in with their favorite restaurants via social media. Maintaining a positive social media presence increases brand recognition and is a great way to share deals, contests, news, or events. Not all the content needs a direct ad because consumers appreciate a variety of posts. Consider including company history, comedy, videos, and local information in your posts. Consumers can also message, comment, or share posts to increase restaurant exposure and directly ask the company questions, providing an opportunity to deliver great guest experiences away from the table.

9.  Have a Sustainability Plan (Source: FitSmallBusiness.com)

Sustainability is more than just a popular trend; it is an integral part of protecting the environment. Customers also appreciate sustainability efforts, and millennials and Gen Z are more likely to patronize restaurants prioritize sustainability in their supply chain. Start by limiting waste at the source, streamlining your ordering process. For waste that can’t be avoided, find new solutions. For example, instead of throwing away leftovers, donate them to local homeless shelters or charities. The food that isn’t fit to be shared can be composted and used as fertilizer for the landscaping. Recycling metal, glass, and paper have a positive impact on the environment by saving them from ending up in a landfill. Recycling will also reduce the number of times a restaurant will need dumpster service.

10.  Encourage Employee Productivity so Tables are Turned Faster (Source: Forbes)

Timeliness in the front and back of the house can increase table turnover. Customers want to enjoy their meal and not feel rushed. Serving staff can be efficient by visiting the table at regular intervals to get drinks, take the order, bring the order, refill drinks, and leave the bill. In between those trips to the table, the server needs to input the order into the POS accurately and begin any preparation needed for their order. The kitchen staff’s productivity is essential to restaurant’s success. If food isn’t leaving the kitchen, then the entire place comes to a standstill. Encouraging employees to work efficiently will turn tables over faster without disrupting the customer experience. Giving your managers the tools to improve scheduling will also help.

11.  Re-examine Your Food Costs so You’re Making a Profit on Each Item (Source: Business.com)

Few restaurants are able to generate valuable reports on which items are selling the most and which are not. Technology can be used to provide insight. Menu items that rarely sell might need to be removed or replaced. Unpopular dishes mean increasing food costs and waste without a return on the investment. Study the pricing for each menu item to ensure that the restaurant makes a profit on the dish. Save money on purchasing by eliminating the purchasing of unnecessary items and periodically getting quotes from multiple vendors.

12.  Offer Specials During the Week to Encourage Increased Attendance (Source: Full Service Restaurant News)

There are inevitably sales slumps during the day and the week. Late afternoon and the beginning of the week are typically slower periods. Bring in bigger crowds by offering daily food and drink specials during those times. It is important to consider the target audience when choosing specials. The older crowd might enjoy an early bird dinner special, while a lunch special can bring in a working crowd. Drink specials are also a great way to boost ticket sales and profitability during the week. Alcohol has a high markup and a high demand, so a promotion that boosts orders can generate higher profitability. Try testing out specials for a week to see what works well and what doesn’t. Advertise specials on social media outlets to increase exposure.

When profit margins are low or nonexistent, a change is necessary. It isn’t enough to stay afloat: become a thriving restaurant that stands the test of time. As you can see, there are many ways to decrease costs and boost profitability. Evaluate the way the business is run to find areas of opportunity to cut costs, be more efficient, and boost POS sales. Increasing the use of restaurant technology can boost sales, increase productivity, and improve inventory management. A more profitable restaurant has a goal of longevity that is possible by implementing these positive changes.

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