How to Make a Restaurant More Profitable
You’re concerned with how to maximize your profitability with the right business formula if you own a restaurant. It certainly helps to acquire affordable ingredients, a dedicated staff and a facility in working order, but your willingness to make changes nets more consumers.
If your losses have you thinking about how to make your restaurant more successful, work on improving your operations one step at a time. Think of the low numbers as a window of opportunity for gains. View our guide to increasing restaurant profits below to learn what actions to take.
12 Ways to Make a Restaurant More Profitable
Some of our tips relate to your products and spending habits, while others focus strictly on customer service. Many owners find success with only some minor changes. For ideas, read our top 12 tips for increasing restaurant profitability:
1. Provide Quality Service
Around 70% of American consumers are willing to spend more money with a business if they offer quality service. Emphasize to all employees that pleasing customers is a significant role of working in the food industry. Here are some ways to encourage staff to improve their customer service skills:
- Greet customers: On your most profitable days, workers get too busy to greet everyone immediately, but customers appreciate courtesy as soon as they enter your establishment. The touchpoint with your host gives your customers a positive first impression.
- Maintain composure: Explain to staff how best to remain professional and friendly with customers who may not match your workers’ cheery dispositions.
- Read body language and expressions: Train staff to notice facial expressions and other body language signs. A good server returns to ask if a customer needs help when they see the customer looking around with a perplexed expression, for example.
2. Support Your Employees
Your workers keep the food moving and the customers happy. Research shows that employees are more loyal when they feel their bosses and supervisors are empathetic. Loyal employees can cut down on turnover and save your profits in the long run. Here are some tips for providing the support they need:
- Step in with customer assistance: While training your staff on handling every type of customer is key, be available for assistance when you can. As an owner or manager, you can help deescalate a situation, keeping your customers satisfied and your employees happy.
- Make yourself available to listen: Tell your staff you are available to listen to any concerns. This simple gesture of support encourages them to come forward about problems and difficulties in the workplace. You need to be aware of when an employee is violating health code protocols or guidelines. Other employees are more likely to report to you if they know you handle situations tactfully.
- Provide extra training: Set aside an hour or two every month to hold meetings and present on helpful topics. Use this time to discuss changes to the menu and seasonal arrangements. Your employees benefit from training refreshers and new information. They appreciate getting paid for a staff meeting, as well, whereas if you send the information in an email, they might have too little time to read it.
3. Manage Your Food Costs
Cutting back on food costs is a simple way to make your restaurant more successful without cutting employee pay. Food spending varies based on restaurant type, location and other factors, but it typically ranges between 28%-35%. Stay within that range with ways to manage your food costs, like:
- Take inventory: Determine what ingredients are being used the most frequently. Examine the cost of goods sold (COGS) and decide on any changes to make.
- Calculate your overall food cost percentages: Divide your COGS by your food sales and multiply that number by 100. Track your earnings, profits and losses.
- Seek out quality suppliers: Look for a good reputation and high quality and quantity for the price. Purchase acceptable food grades from a supplier you trust. Going for the highest grades costs more money, and sometimes the difference between the very best and the near best are cosmetic. The most cosmetically appealing fruits and herbs are better for use as garnish, but many grade No. 2 products taste the same as the superior No. 1 products.
- Look at the raw costs and make reductions: When you see certain ingredients closing the margin between your profits and your earnings, handle this by raising the cost of certain menu items, switching the expensive ingredients with cheaper replacements or cutting the less profitable items from the menu.
- Monitor your portion wastes: How many customers are unable to finish their meals and ask for take-home boxes? It might be time to downsize the portion or reflect the portion sizes in your prices.
4. Target the Consumer Generations
Your menu should appeal to the tastes of your main customer base. Look into the shared values of millennials and Generation Z if you serve many of them, and find ways to get them to dine more frequently. If your customers are mainly boomers and Generation X, update your atmosphere.
Consider these marketing tips for millennials, Generation Z and patrons with youthful spirits:
- Add a corner for board games patrons can borrow, or set up a sign inviting customers to bring their own games and cards.
- Set up free Wi-Fi for customers to connect their devices.
- Rename poorly selling items with fun and creative names that appeal to young audiences.
For baby-boomers and Generation X, try these tips:
- Set up a small magazine or book library to encourage a relaxing atmosphere that steps away from technology.
- Use and market organic products or vegan and vegetarian dishes, which appeal to Generation X and older millennials.
5. Market on Social Media
The first step to successful social media and digital marketing is creating a website. Make the public face of your business accessible and easily searched. Customers visit your site to check your menu, business hours, address and ordering options.
Join the major social networking sites for free business advertising, like Facebook, Twitter and Instagram. Interact with your customers, respond quickly to messages, create polls and post plenty of photos showcasing the best of your food. Nearly 2.9 billion people worldwide use Facebook alone, so you’re sure to reach a wide audience and gain new customers in the process.
6. Offer Specials or Coupons
Have daily specials for your customers to look forward to and coupons to incentivize them to come back for a discount. Ways to keep customers coming back with special incentives include:
- Offer free or discounted food items for customer reviews.
- Ask customers to take online satisfaction surveys.
- Update the menu with seasonal items, which are often hot sellers.
- Hold a holiday giveaway event.
7. Focus on Upsells
Train your servers and bartenders to know your menu well enough to sell the more profitable items. Upsell menu items for the customer’s benefit instead of solely for a profit. Servers should avoid being pushy and making customers uncomfortable.
Fast food restaurant workers upsell by asking visitors if they want a larger-sized fry or drink. At sit-down restaurants, tell your staff to upsell by asking customers if they would like to try an appetizer before they get their food and a dessert after they finish eating. Let the customers know about the specials and the best drinks from your house drink menu.
8. Have a Good Location
Your location is one of the most important features of the face of your business. You want a location that gets a good amount of traffic, is clean and well-kept and matches the values of your target audience. A few ways to improve your location include:
- Come up with a unique theme: Decide on a unique quality you want to accentuate. Some let customers observe as staff prepare food, while others offer a whimsical experience that plays on the surrounding area, like a beach or nautical theme. Let the community contribute to the atmosphere by displaying children’s drawings or local art. Some restaurants get even more creative, offering customers the chance to draw on a wall.
- Decorate the customer spaces: Tasteful decor creates a fitting atmosphere and reflects the culture of your fare. Customers see your decor as soon as they enter. When people enjoy the atmosphere, they take pictures and post about their experiences, generating free word-of-mouth advertising.
- Hire a professional landscaper: Fine-tune your building’s exterior with flower beds and shrubs. A manicured lawn gives your building an inviting appearance.
- Practice excellent cleanliness: As you keep up with health inspections, go the extra mile by having staff regularly clean and vacuum the floors. Wipe down areas that visitors frequent but commonly get overlooked. Hire a professional cleaning company to sanitize your facility at least once per month.
9. Offer Takeout and Delivery
Takeout services encourage more customers to place orders and increase your virtual traffic. Some busy customers prefer to get food quickly on the go. Others might want to dine at home instead of in public or get food delivered if they’re too busy to leave home. All of these situations make people less likely to want to eat in somewhere, but delivery is always an appealing option, especially when the food is high quality.
To promote takeout options, let dine-in customers take business cards or menus home. They will remember your food every time they see your business’s name sitting on their desk or poking out from inside a drawer.
10. Use a POS Management System
Use a point of sale (POS) tool to reduce your operating costs by:
- Managing your inventory and ordering
- Analyzing your products for price or menu adjustments based on popularity
- Taking inventory
- Notifying staff when products are running low or have sold out
- Managing employee paychecks and tracking time clocks
The POS system stores your data and tracks your numbers, so you will know if you’re losing money.
11. Reduce Food Waste
U.S. restaurants generate a significant amount of food waste every year, with estimates of around 22 to 33 billion pounds of unused products. To save on food costs, make use of the leftover ingredients that are still in date and have yet to leave your kitchen. Ways to reduce your kitchen waste include:
- Save vegetable scraps and mushroom stalks for preparing house vegetable stock.
- Grind unused coffee beans to make glazes and toppings.
- Save stale bread products for croutons, breadcrumb blends or bread puddings.
- Use excess grain to make granola.
- Shred unused roasted poultry for use in soups and stews.
- Donate leftover brewing grains to local farms for a tax deduction.
- Offer the kitchen leftovers to your staff to boost morale.
- Take the leftovers to your local homeless shelter, food pantry or community garden, keeping a record of your charitable donations to collect tax deductions.
12. Use a Cloud Kitchen
Set your restaurant apart by using a cloud kitchen, also called a ghost or commissary kitchen. Commissary kitchens let staff prepare food for delivery offsite of your main location. Growing demand for online food service is the driving factor contributing to the increase in cloud kitchens.
Restaurants with cloud kitchens use online food delivery platforms, like DoorDash, Postmates, Uber Eats, or a white-label platform to source orders and facilitate deliveries. Hire a licensed commercial facility as your business’s cloud kitchen. The equipment should include prep tables, stoves, ovens, hood vents, sinks, refrigeration and other necessities. Some benefits of hiring a cloud kitchen include:
- Streamline the carryout process: Staff prepare popular menu items at the rented kitchen spaces, and restaurants use online food delivery platforms or their own service to deliver to customers locally. If you have a high volume of orders, hire multiple virtual restaurant facilities to meet the demand, or expand your delivery area with more rented facilities.
- Reduce administrative burdens: Partnering with a kitchen rental company is a much more affordable option than expanding your building. The company conducts its own health inspections and performs its own equipment repairs, janitorial services and security. You are also not responsible for the cloud kitchen’s utility bills and property taxes.
- Save time and costs by renting a space and equipment: If you are a busy entrepreneur, hiring a cloud kitchen is an appealing method for preparing your food products without securing your own building and equipment, which cost significantly more to buy rather than rent.
Rent a Commercial Kitchen With Revolving Kitchen
Understanding how to make a profit in the restaurant business is a collaborative experience. Here at Revolving Kitchen, we have 25 fully equipped commercial kitchens of up to 680 sq. ft. Members may rent a kitchen in as little as a single day.
Join us on a short-term basis to test your in-house order offset during a busy seasonal period, or stay with us for a longer term and enjoy the rewards of having an additional private kitchen space. For more information, contact us online or call (972) 332-3516.