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The restaurant business is one that's been around a while. Archaeological ruins prove that the streets of ancient Rome had businesses that served hot food to patrons who happened to be
passing by. Modern cities usually have restaurants at each intersection, and sometimes there
are more.
People are frequently too busy to cook but still need to eat, and dining out makes life easier and
better. The profit potential in this industry is undeniable, but only if you handle your internal
restaurant operations right. Knowing some restaurant tips and tricks for better business can give
you an advantage over your competition.
Improving Your Restaurant Business
If you want your restaurant to be more successful, there are two different angles that you can
approach this from. One way is to boost your sales volume. The second way is by lowering your
expenses.
If you want to boost sales volume, then you have multiple techniques you can try.
1. Add Extra Seating: If your restaurant is already booked most of the time or just during
peak times, then see if you have enough square footage to add more tables or seating.
2. Enhance Table Turnover You never want to rush a customer out the door, but you do
want to expedite their service to increase revenue per minute at the table and get more
people seated.
3. Freshen Up the Menu Layout: There is a science known as menu psychology or menu
engineering. Make sure everything featured on the menu is both profitable and popular.
4. Optimize Menu Pricing: Your food cost percentage of any menu item should be 28% to
35% to leave you room for other expenses. Raise prices on anything underpriced
5. Put Servers Through Sales Training: Servers shouldn't just take orders, they should
also encourage sales of appetizers, desserts, and alcoholic or specialty beverages.
6. Utilize Marketing To Boost Traffic: A regular customer base might be most of your
business, but you still want more people walking through your front door whenever
possible.
While boosting sales volume helps, reducing your expenses also matters.
1. Cut Down Food Waste: Don't over-order food that might spoil, and train everyone to
avoid wasting anything. In many restaurants, the two expenses competing for most
expensive are payroll and costs of goods sold. Efficient operations save you money on
both.
2. Reduce Your Utility Bills: Energy-efficient lighting and appliances can make a huge
difference in your energy consumption. In a time of heightened awareness about climate
change, environmental considerations are selling points attractive to many customers.
Use Software For Restaurant Scheduling
If you've been doing scheduling using sticky notes and texts, it might be time to switch to
restaurant scheduling software. With the right software in place, you can easily create
schedules and manage your team. You'll ensure compliance with applicable labor laws, improve
the punctuality levels of your team, and schedule staffing for the levels that your restaurant
needs.
Payroll is often the biggest expense in a restaurant, but scheduling software can actually help
you keep all that in check. You'll immediately start saving time and streamline your operations.
When fully implemented, you'll start reducing your labor costs since you can account for
everything in one place.
Employees will be able to swap shifts and request time off using their smartphones. You can
review these requests quickly and approve them. Managers will also see overtime before it
happens so they can avoid spending more than necessary.
You might even be able to let the software do automatic schedule creation. Based on historical
patterns, shift preferences, and sales forecasts, the software might be able to create schedules
that are totally filled in for you, saving you lots of time. The software should also be able to do
this for every location in your restaurant chain if you have more than one.
Focus On Profit Margin
As Investopedia points out, many investors consider food and beverage companies to be an
attractive option. You might already know that restaurants usually have a less cyclical business
pattern because people always need to eat. There just aren't as many market fluctuations as in
other industries.
Investors love using profit margins to analyze restaurants. You should focus on this, too, since it
demonstrates how well or poorly your own restaurant might be doing in terms of cash flow.
However, you also need to know what your target metrics should be, and that varies based on
the specific restaurant type you are operating.
● Full Service: Full-service restaurants often have a profit margin range of 2% to 6%. The
very nature of the business requires more staffing.
● Fast Food: Fast-food, fast-casual, or quick-service restaurants usually have profit
margins of 6% to 9%. Less staffing is required for cheaper overhead.
● Food Trucks: A good truck has food costs similar to brick-and-mortar eating
establishments, but they have lower overheads. A health profit margin is 6% to 9%.
● Catering: Catering services have even lower overhead. A high-end catering service
might average profit margins in excess of 15%, but 7% to 8% is more likely.
If your restaurant is looking for areas of growth, then adding a food truck or catering service to
your brick-and-mortar establishment might be a good way to go.
Demand Is Surging
Demand for restaurant service is possibly higher than ever before. People want to enjoy a good
meal, but they also love doing it away from home and especially when someone else does the
cooking and cleaning. The right menus help them enjoy foods they don't know how to make at
home, and most people just enjoy being waited on to some degree. Restaurant meals are often
by nature prepared with better ingredients than consumers can normally get. When you
consider the explosion in popularity of food delivery services, you can see that there is money to be made.