10 Ways To Make Your Restaurant More Profitable | Understanding The Margins

Note- This post may contain affiliate links, we earn from qualifying purchases made on our website. If you make a purchase through links from this website, we may get a small share of the sale from Amazon and other similar affiliate programs.

The restaurant business is enticing when you consider that 1.8 billion dollars are spent on restaurants, and that too per day. But this cutthroat business is not kind to all. Stats say that about 60% of the restaurants either fail or change ownership in the first three years.

Ways To Make Restaurant More Profitable

Owning a restaurant isn’t as easy as it may seem. Many people open strong, but soon their business fizzles out, leaving them covered in losses. It’s very important to understand the ways that you can make your restaurant more profitable. The ways are easy, but many people fail to apply them.

One way to make your restaurant profitable is to hire and train your staff appropriately. You also need to reduce food costs and invest in technology. You also need to market, franchise and promote your restaurant. 

Franchising opportunities are a great way to expand your business. Besides these, there are a few tricks up my sleeve that you can use to boost your restaurant business and convert the losses to profits. Here are 10 ways to make your restaurant more profitable and also understand your margins.

10 Ways To Make Your Restaurant More Profitable

The average profit margin in a restaurant is about 2% to 4%. So to increase your profits, you need to reduce a few costs here and there. Let’s see some ways you can do that to make your restaurant more profitable.

1. Do Your Research and Know Your Operational Cost

Do Your Research

The first way to make your restaurant profitable is to research your operational costs to the last penny. This should be especially true for your food and alcohol. If we look at statistics, the average costs of food and alcohol are around 23% and 21%, respectively.

Knowing these percentages will help you set your menu prices to help you make profits without ripping the customer off. This is only possible with extensive research. You also must maintain and balance your books and keep up with your staff.

Don’t dive straight, and make sure you have the right preparation. You can read a few self-help books for it or go through some restaurant management blogs. All in all, it becomes important to know all the things about the business you’re in and running.

2. Reduce Food Costs and Avoid Food Wastage

Food Cost

Food costs also fall in your operational cost and are among the three big costs of a restaurant. The other two are labor and overhead costs. Reducing food costs will help you get a chunk of the profit margins needed to keep your business running.

It will also help you reduce food wastage, which in turn becomes a reason for the loss. One way to do that is to buy fresh. Fresh ingredients are cheaper than packaged and frozen ones, not to mention tastier and healthier. When you buy fresh, you also have more control over the quantity.

You can also use lower-priced substitutes in times of budget crisis or unavailability. You also need research to determine the days you’ll be needing more or less of both food and alcohol. This will help you plan better and save a lot of money, giving way to a more profitable business.

3. Hire Appropriately and Train Properly

Hire and Train Staff

One thing you need to keep in mind is that a restaurant must have good servers and staff. The reason? The staff is what represents your restaurant in front of customers. So, make sure that you hire your staff accordingly.

Once you have hired appropriate staff, ensure proper training. They should know the products and always try to upsell them. They also need to encourage the customers to invest in drinks, appetizers, snacks, and desserts besides the main meal.

A well-trained staff makes the need for a lot of people redundant. You can get the job done with a few people and save on many overhead costs.

4. Invest In Technology Like A Good POS

Good POS System

The world has shifted to automatic mode, so the restaurants mustn’t be on manual. Rather than risking losing receipts or having a messy inventory that creates bigger problems, it is better to invest in technology. A great POS system will do wonders for your restaurant.

It will also help reduce your operational cost. A good system will not only help you maintain receipts and food costs but also other things. It will help you determine your best-selling item. You can set and change your menu prices accordingly.

You can also use it as a punch-in, punch-out system for your employees and their salaries. Managing the inventory will help you determine when an item is about to run out so you can get refills. It will also reduce food wastage as you’d know which item you haven’t used.

So, investing in technology is only a one-time investment that will keep giving you back. These restaurant managing systems ease the technical part of managing a bit easy.

5. Market and Franchise Your Restaurant

Marketing Restaurants

Marketing is a crucial part of all businesses nowadays. So, it becomes vital to market your restaurant. There are various techniques for that. You can go with the old-school ways like articles, reviews, and billboards, or you can embrace the new ways like social media marketing.

If you want to double your profits, one way is also to look for franchising opportunities. Franchising a lot of restaurants helps establish their name and eventually increases profits.

6. Create A Digital Presence Through Social Media and Web Pages

Promoting On Social Media

This comes under the wing of marketing but is so prominent that it deserves a heading of its own. Your digital footprint is very important. You must create and establish your digital presence to enhance your physical presence.

Creating blogs, web pages, and accounts of your restaurant on social media will more people attracted to your restaurant. You can upload beautifully clicked pictures of the food, create fun challenges, or create an ambiance that more and more people flock to your restaurant.

Tell people about your specials, your best hours, and offers. Improve your SEO so that your restaurant is easily findable. Put details like your location and services. Also, encourage people to leave good reviews, so your restaurant owns a good reputation.

7. Introduce Food Delivery and Take-Out Options

Food Delivery Options

A lot of people prefer food delivery and take-out options. If you are not offering these services, you automatically fall behind many other businesses. Introducing these two services will boost sales, increasing your profit margins.

You can also pair up with food delivery services like DoorDash so that your restaurant can reach more people using the app.

8. Offer Coupons, Specials, Loyalty Points, and Rewards

Coupons

There are many ways to attract customers, but if you want long-term profits, you want to retain them. One great way of retaining customers is by offering them coupons and specials.

You can also have loyalty points for a regular customer that ensure awards. One example can be a free meal worth a certain amount for people with a certain amount of loyalty points.

This will also improve customers’ experience as they’ll receive more than they paid for. This behavior also encourages other people to come to your restaurant.

9. Prioritize Customer Satisfaction and Feedback

Customer Satisfaction

As we know, business is about money and people. This point may not be related to money but is related to the people part of the business. It is important to take your customer’s satisfaction and feedback into consideration.

A satisfied customer will make sure to visit your restaurant another time. The customer’s feedback will help you recognize your strong suits and locate and work on your weaker ones. Always remember, a happy customer means a happy business.

10. Know Your Customer To Serve Them Better

Know Your Customer

Last but not least way to make your restaurant profitable is to know your customer. You must know the kind of customer you’re serving so that you can serve them better. This again benefits the people side of the business and helps you build a connection with your customer, a connection that can go a long way.

Final Thoughts

So these are a few ways to make your restaurant more profitable. These ways are some of the sure-shot ones that’ll turn your dipping graphs into rising ones. This was all from my side today. Did you find the article helpful? Let me know your thoughts in the comments.

If you have any other way that you think will be helpful, it’s welcome. Leave all your precious suggestions in the comments. I’ll see you another time. Until then, take care and good luck!

Leave a Comment

Your email address will not be published. Required fields are marked *