13 Tips for Improving Restaurant Profitability
Improving profitability is one of the first steps to expanding and growing a restaurant. After all, if more of each sales dollar falls straight to your bottom line, you will have more resources available to increase capacity or try different strategies. Many of the changes that can be made to improve a restaurant’s profitability are simple adjustments to how the restaurant is operated and can be implemented with relative ease.
1. Offer Deals on Weekdays
Since most restaurants experience less traffic during the week compared to weekends, think about offering a discounted appetizer or special combo meal on weekdays. You could also consider branding certain days of the week. For example, Thursdays could be “Ladies Night” and the restaurant can offer specials on wine or other items you’ve found are popular with this demographic. Finding innovative ways to draw customers in on slow business days is a great way to improve overall profitability.
2. Analyze Each Menu Item
Consider evaluating the profitability and sales record for each individual item on the menu to determine if it is priced appropriately. If a menu item has low sales and a low profit margin, consider either raising the price of the item or eliminating it from the menu.
3. Prototype New Items With Taste Tests
When considering adding a new mixed drink or food item to the menu, consider offering free taste tests to customers to gauge its popularity before stocking up on necessary inventory. This is particularly helpful for unconventional items, since it’s difficult to know whether or not they’ll be well-received by customers. Another way to test the popularity of products is to offer them seasonally and measure their success over the season.
4. Implement a POS System
Consider implementing a mobile point-of-sale system. With this technology, servers can communicate instantly with the kitchen or bar and send in customers’ orders immediately after they are placed. Having a POS system has been shown to improve the speed and accuracy of drink and meal preparation and can lead to an improvement in overall customer satisfaction.
5. Consider Integrating Additional Technology
Aside from POS systems, there are many other ways to integrate technology into your restaurant to maximize efficiency and in turn, increase profitability. For managers, consider scheduling management systems so they can spend more time with customers and less time scheduling. For staff members, try headsets to help clear and seat tables faster in larger restaurants. For customers, look into apps like NoWait that allow them to virtually get in line before arriving at the restaurant.
6. Evaluate Current Supplier Contracts
Try to re-assess current supplier contracts periodically to ensure you are getting the best deal possible. Consider making a short list of the top-selling menu items at your establishment along with their necessary ingredients and using this list to compare prices quickly among various suppliers. If there are other suppliers offering more competitive prices, think about switching suppliers or using their prices as leverage to negotiate new contracts with current suppliers.
7. Hold Off on the Complimentary Appetizer
If your restaurant offers a complimentary appetizer such as chips or bread, train servers to ask customers if they would like an appetizer before bringing it to the table. This is an easy way to avoid wasting food and reduce unnecessary expenses.
8. Switch to Motion Sensor Lights
Look for places in your business that do not need to be lit at all times. Lights in bathrooms, freezers, and outside exterior doors that are not used by customers may not need to be lit when not in use. If these lights are always on, switch to motion sensing lights so the lights are only on when they need to be. This will keep energy costs from being unnecessarily high.
9. Buy Fresh Produce Locally if Possible
Fresh ingredients often don’t have a very long shelf life. Buying locally cuts shipping time, thus giving a restaurant more time to use their fresh produce and reduce waste.
10. Check the Thermostat
During the summer, increasing the standard temperature in a restaurant by 1-2 degrees can save a lot in energy costs. Conversely, during the winter, decrease the standard temperature by 1-2 degrees. This will save money without making a big impact on the comfort of customers.
11. Find Used Equipment
Consider used equipment on items that do not need to be purchased brand new. If you are looking into buying used equipment, try using the auction method to purchase items due to the extensive evaluations of the equipment before it is sold by the auction houses.
12. Check the Refrigerators
Consider having employees do daily refrigerator checks to make sure the temperatures in refrigerators are not drifting below the required level to prevent overpaying on energy. This could be part of the opening or closing process for employees to complete. Furthermore, conduct annual inspections on refrigerant charge. It is said that incorrect refrigerant charge can reduce efficiency by up to 20 percent and can also increase your risk of equipment failure.
13. Occupancy Sensing Powerstrips
Consider investing in power strips that have built in occupancy sensors in order to reduce energy costs caused by inactive appliances in a restaurant.
Lexy Garrett is a marketing manager at Sageworks, a financial information company that provides financial analysis, cash flow applications, and business solutions to business owners and their accountants.