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7 Ways Restaurants Can Maximize Their Profitability

October 6, 2020

Running a restaurant is no easy feat. It is considered one of the more challenging industries with a pretty high failure rate. Whether you’re running a mom and pop diner or a chain of sandwich shops, all restaurants operate with one singular objective in mind; feed hungry patrons and make money doing it.

Although there is no one surefire way to drive your restaurant’s bottom line, here are seven ways you can increase the  profitability of your restaurant, and stay competitive in a quickly changing landscape:


1. Go back to the drawing board (AKA your menu!)

Having a firm grasp on how your menu impacts your bottom line is essential to the health of your business:

What Do Customers Love?

  • Take inventory of what dishes do extremely well amongst patrons, as well as what dishes tend to be a big flop. If you have big sellers on the menu make sure you feature them prominently. Those items are what keep customers coming back week after week.

How Much Does It Cost To Make? 

  • Believe it or not, many restaurateurs do not know the exact breakdown of costs associated with their menu’s line items. If you don’t know how much your product costs to make how do you know if you are selling it at a profitable price? Getting a handle on the cost of ingredients and labor costs associated with each menu item is a must for running a profitable restaurant.


2. Get with the times (and get online)

Hungry people are online and they are looking for a place to eat. Will your restaurant pop up in their search results on Google, Yelp, or Foursquare?

With hundreds of options vying for the attention of your prospective customer, it is crucial that your restaurant have a strong online presence. You want to make it easy for people to discover your location, see what’s on the menu, make reservations, or place an order online or by phone

In addition to making it easier for new customers to discover your restaurant, being online allows you to interact with your regulars which can greatly improve your profitability. For example, Yelp estimates that businesses who claim their free page see sales increase by $8,000 per year.   


Read related: The “Internet of Things”… What Does it Mean for Small Business Owners? 


3. Add Delivery

If someone wants to buy your food but they can’t make it to your restaurant…let them buy your food anyway. It sounds logical but many restaurateurs balk at the cost of adding delivery. Hiring a delivery staff can be expensive and the 13.5% eating into restaurant’s already thin profit margins., sites like Seamless and GrubHub, often seem like non-starters.

However, adding delivery should allow you to significantly expand your business through increased reach and repeat business. If you have a handle on the costs of your menu, as mentioned above, you should have no trouble adding delivery as a new profit generator.


4. Employ traditional marketing tactics that work

Marketing has changed significantly over the last decade due to the internet’s dominance. However, there are a number of traditional marketing tactics that restaurants continue to rely on to drive their business. Old school advertising such as direct mail, coupons, and ads in the local paper still have their place in today’s digital world.

To make the most of traditional print marketing it’s a good idea to add the following to each campaign:

  • Unique Campaign ID – Each coupon, mailer, or ad should have a unique code that you can use to track how it contributes to your business. You want to know which specific ad spend is bringing in customers.
  • Website URL – If you have a website for your restaurant make it easy for people to find the site.  
  • Social Media Accounts – Letting people know that your restaurant is on Yelp, Facebook, Twitter, Instagram, or Snapchat is a smart way to invite them to connect with you for a long-term relationship.
  • Phone Number & Address – If the size of the piece allows make sure you provide a phone number and address of your restaurant to make it easy for the recipient to place an order or find your place.

Watch related video: Social Media Stats That Are Useful For Your Business


5. Go beyond “cash only”

Did you know that customers spend 12% to 18% more when they pay with a credit card compared what they spend when they pay with cash? Yet it is still not uncommon to see restaurants with “cash only” signs on the register. If you are not yet accepting credit cards or mobile payments, now is the time to consider adding this options for your customers.

Not only do customers spend more with credit cards, for some people it’s the only way they spend money. A cash only policy today is likely to cost you much more than you can imagine in business lost from potential customers who would have gladly stopped if only you were willing to accept their money.

It’s true that credit card fees can be significant but with an expected increase in average ticket size of 12% or more and the addition of business from new card wielding customers the cost may be worth it. And with today’s technology making it easier than ever to accept credit cards and mobile payments it’s hard to imagine a reason not to give your customers the option.


6. Show your customers some love

Many key drivers go into making your restaurant a success, but keeping your patrons happy and showing them that you value their business is probably most important of all. In a world of countless options for almost any service imaginable, it is important that establishments go the extra mile to show customers that they care. Below are a few suggestions that your customers are sure to love:

  • Send a free meal certificate to every patron celebrating their birthday.
  • Host an annual block party and open it up to the community.
  • Extend a second happy hour for guests, also known as a ‘reverse happy hour.’ This way customer who work later hours or have a graveyard shift are able to partake

Remember your customers have choices, so show them you appreciate their business any way you can… And get creative!


 Read related: The 5 Reasons Small Businesses Fail


7. Make your team happy

When it comes to increasing the profitability of your restaurant, ensuring that you have a qualified staff who enjoy being apart of the team is essential. Restaurants, in general, are notorious for having high employee turnover rates but great restaurants have people who stay for years.

There is a direct correlation between happy servers equaling happy customers, and not taking care of your staff could lead to reduced frequenters of your establishment. Make it a point to invest in your workforce, and truly create a company culture that feels like a family.

Train workers consistently on how to be more effective and efficient within their respective roles. Include your workers and get their feedback when deciding to make changes around the restaurant.  Let them taste new menu items first, this way they know their opinions are valued, and it enables them to be able to speak to the new additions when asked for recommendations by patrons.

If your restaurant is currently “patronly challenged,” don’t be afraid to incorporate one or even multiple tips from the list above. Again, there is no one specific way to maximize restaurant profitability for your establishment. However, what you can do is analyze your menu, assess your staff or examine closely the way that you keep in touch with your customers to identify gaps for growth.