December 12, 2023

Increase your restaurant’s profitability potential

Creativity and cost control can provide you with a gift that will keep on giving to your bottom line.
Business owner smiling with his staff at a restaurant
Your kitchen probably has the capacity to produce more food, and selling more is the key to generating more revenue. But more isn’t always more; sometimes less is more when you fine-tune food and service approaches that deliver the best ROI, and when you exert tighter control over waste and overhead costs.

Evaluate ways of increasing revenue based on how easy they are to implement, how profitable they are, and how they add to your brand. Selling more items you already have on the menu is easy and profitable, whereas starting off-premises catering could involve a major investment in equipment and labor if you don’t currently offer it. 

Ideas you may already have considered include:
  • Increasing check averages through suggestive selling of “extras” like soup, dessert, alcohol beverages and mocktails. 
  • Streamlining your menu to eliminate slow sellers or too-small-margin items; instead feature them as “specials” or add new “specials” to the streamlined menu, either daily or perhaps quarterly with seasonal items.
  • Promote “private” events that can sell out a private room or entire restaurant for an evening. 
  • Set up online ordering if you haven’t yet or contract with a third-party delivery service.
  • Add catering services, seek out event spaces that contract out catering services.  
  • Expand to a new daypart if it makes sense for your staffing, location and menu.
  • Target a new audience based on your area demographics. 
  • Develop a loyalty program that increases visit frequency and/or rewards purchase behavior.

Improve the experience. While you may think your food sets you apart, service—good or bad—is what customers remember. Give guests a positive memorable experience by making it easy to do business with your restaurant, from finding you and making reservations, to ordering, dining in or out, and paying. Also important, make it easy for them to communicate with you, and address their comments/concerns as soon as possible, whether in person, via text, or on social media review sites.

Improve your staff experience. An informed and motivated staff will help you achieve financial goals. Hold regular weekly staff meetings to provide:
  • Feedback on current menu items; tastings of new items.
  • Info on upcoming events/promotions. 
  • Profitability goals, what they mean to staff, and current achievement of targets.  
  • Social media/guest feedback (both good feedback and points that need improving).
  • Recognition and rewards for great guest feedback; for creative ideas from the chef, achieving a sales goal, pulling off a successful event, etc.

Use your POS data. Your POS system has access to information such as your loyalty program and menu ingredient costs and it can generate real-time, daily, weekly or monthly reports that can help you tweak profitability in a number of ways. Among many other things, a good POS system can:
  • Analyze your menu to determine which items are the most profitable, and which are the best-sellers, so you can adjust pricing or promote more profitable items.
  • Help you redesign your menu to put more profitable items in the most often-read locations.
  • Prompt staff up-selling automatically.
  • Customize marketing plans to specific loyalty customers, encouraging them to return more often and spread the word about your restaurant and promotions.
  • Schedule specials and promotions to run automatically until you change them.
  • Track inventory and trigger orders when inventory is low or is offered at a special price by suppliers.
  • Measure marketing programs to help you determine which promotions provide the best ROI.

Control your costs. Food and labor are your two biggest costs. Help keep those costs in line by:
  • Tracking staff performance by sales and by amount of time spent with each table.
  • Improving communications between the service and the culinary team, reducing errors and speeding service.
  • Scheduling your best performers on your busiest days or dayparts.
  • Identifying times of day when you need more or less labor on the floor.
  • Decreasing the number of voids and employee theft to reduce shrinkage.

It’s smart to review vendor contracts periodically to be sure you’re getting good pricing on expenses such as linens, landscaping, and janitorial services. Also, monitor big-ticket expenses like equipment repair by implementing a preventive maintenance program.

Monitor your digital presence. Now, more than ever, we live in a digital world. Your customers connect with, order from, and comment on you digitally. A negative review or unfavorable comment can affect the restaurant’s profitability for weeks or months. Your restaurant’s online presence needs to be impeccable.
  • Keep your website current, relevant, and interactive. Not only should it define your brand, but it should also tell your story. Use analytics to determine what drives viewers to your site and improve your SEO; is your restaurant topping search lists?
  • Be sure online ordering, third-party ordering apps, and loyalty programs all work smoothly and are easy to sign up for and use.
  • Monitor social media platforms, and respond to comments, both positive and negative, as quickly, but as genuinely, as possible. 

Finally, strive for constant improvement in all areas of your restaurant. When you thank customers for their business, ask them what you can do better for them next time they visit.