How to Make Your Restaurant More Profitable
“This restaurant will be closed in a year.”
My friend looked at me in astonishment. We were in an Asian tapas restaurant in South East London, an up-and-coming and in-demand area – lots of new apartments being built, definitely the “place to be”. After pointing out all the benefits of the area – a growing economy, the boom of tapas, the growth of Spanish, Italian, Peruvian, French and every other kind of food – my friend asked, “WHY?”
“This menu is not profitable.” I really loved the food there but, unfortunately, the restaurant was closed within 6 months. The owner had put all his savings into the place and he didn’t have any investors behind him, so he ran out of money.
The business model for a restaurant is supposed to be easy: don’t spend more than 30% on goods, 30% labour, 20% bills and rent and you can take a profit of 20% home. But, is it really that simple?
After Brexit, the cost of many drinks and ingredients has increased substantially. The living wage has increased by over 15% in 3 years and landlords have increased rents. So, operators really need to take control of their costs. Sounds easy? a piece of cake? Not necessarily…
Chefs not only have to produce amazing food that wows their customers, but also be excellent administrators. They need to be aware of the number of hours their staff are working each week, control stock, reduce waste, ensure suppliers are providing the right ingredients at the right price, make sure portioning is followed and still, put the best possible food on the plate.
It’s the same for the general managers. It’s not enough to be good on the floor and have great attention to detail in providing an amazing service. Control over consumables, chemicals, repairs, marketing, comps and others is a must now for a restaurant to be as profitable as it can.
Systems help a lot, but not every independent restaurant can afford the cost of the sophisticated software solutions out there. It’s like paying for a Ferrari when all we need is a Fiat. In my experience, software works, spreadsheets work but nothing works better than training. If your whole team understands your business model, they will be able to help you to improve day by day.
I’ve seen a kitchen porter increase the profitability of a restaurant when he noticed that most customers left 1/3 of their chips on the plate. The restaurant decided to reduce its portion size, reduce the price a little bit, and give the option of a more expensive larger portion for those who missed the old size. This led to an increase in weekly profits of 3%. I know – they sold lots of chips! But it shows how controlling waste can help the bottom line.
Help your staff to understand how taking care of the little details will help your performance, and they will help you achieve big things! Training is key, help them grow and they will help you grow your business.
by Pilar Garcia, Pendulo
‘The only thing worse than training your employees and having them leave is not training them and having them stay’. — Henry Ford