Industry Tricks to Boosting Restaurant Profitability
Posted: Aug. 16, 2015
Everyone wants to increase profits. Whether you’re scraping by with your first restaurant, or flush with cash from a career as a successful restaurateur, extra money is always welcome. The below tricks are simple and inexpensive ways to pad your bottom line.
Know Your Food Costs
Food costs can fluctuate greatly throughout a given year. The cost you pay for your food will in turn affect your profit margin. Drastic fluctuations in food cost, such as the current egg-tastrophe in which avian flu has caused egg prices to skyrocket, may influence your ingredient selection. It is important to pay close attention to your ingredient cost. If ingredient costs are hiked, you can maintain your profit margin by increasing your menu prices. If food costs slowly creep higher, and you fail to notice, your profits will suffer.
How long should your menu be? Where should you place high margin items? The answers to these questions and many others lie in the extensive research conducted by industry professionals. A good way to increase profitability is by making simple changes to your menu, such as dropping item dollar signs. A small edit to your menu like this can like this can save you money and increase your profits.
Upsell your Way to Success
Upselling, the technique of recommending dishes to increase ticket size, can be an effective means of increasing your profitability. Training employees how to upsell is important as an untrained server attempting to upsell can annoy customers. In contrast, a well trained server will understand a customer’s body language. This knowledge informs the server if a customer is open to an upsell and can be used to subtly sway decisions. One of the most common forms of using body language to upsell is the The Sullivan Nod, which is when a server makes a suggestion while nodding in order to influence a guest’s order. Another simple way to upsell is training your servers to know which menu items have the highest profit margins, so they can recommend these items most frequently.
Utilize Social Media
Social media is an effective and affordable way to raise awareness about your restaurant. The most popular social media websites grant you some control over who will see your post. For instance, Facebook allows you to sort by region, age, gender, and interests, completely for free. We recommend using social media to post daily specials, pictures of your food, or exclusive offers. The more people who interact with your page, the higher the probability of increased traffic in your restaurant. For more information on this topic, refer to our post on “Increasing Your Restaurant Traffic with Social Media Tips.”
From helping cut costs to increasing customer satisfaction, technology can do it all. Most POS (Point of Sale) systems offer customizable and detailed reports that allow for data-driven decisions regarding operating hours, inventory management, and employee management. Another way to use technology is electronic loyalty and rewards programs, which are popular among consumers and are a great way to create a loyal customer base.
Keep Up With Trends
It is important to be knowledgeable about new trends in food and restaurants. Reading industry publications will help you through this process as they constantly cover new food, drink, and customer trends. Brunch is a good example of a growing trend that has enabled restaurants to increase their profitability. Just a few years ago, brunch was the exclusive territory of diners and breakfast joints. Today, mimosa-fueled brunches are padding the bottom line of all types of restaurants. By understanding new and changing trends, you’re able to give customers what they want, and when and how they want it.
Posted: Aug. 16, 2015 | Written By: Brad Endres