All restaurant entrepreneurs are concerned with making a profit. Once you are making a profit, you want to increase that profit. If you’re not making a profit, you want to at least reduce your losses. So how do you go about doing that? What is your plan for increasing your restaurant’s profits? One Fat Frog is happy to share the best way to increase profit and the most common mistake.
The most common mistake is to rely in increased sales increasing your profit. Of course increased sales is the goal. You want more customers, you want those customers to return to your restaurant more often, and you want them to spend more money while they are there. Certainly there are things you can do to encourage an increase in sales, such as promotions and marketing. However, sales are difficult to predict and if it was easy to increase sales, no restaurants would go out of business. That’s why you need to rely on the surest way to increasing profit: decreasing your costs.
Before you slash any costs, make sure you don’t make any cuts that would adversely affect diners’ experience or otherwise cause a reduction in customer visits. With that in mind, there are a lot of costs that can be cut to make your restaurant more profitable. The most obvious cuts are in payroll if you can cross-train employees to make fewer employees able to do the same amount of work. Other cost cuts can be made by shopping for better deals on your insurance and waste removal services. Also think about if you are using energy efficiently or if changes (such as going from electric to gas) would reduce your electric bill. You may even be able to renegotiate your lease or rent.
You can also reduce the amount of food waste by trimming your menu and eliminating ingredients that aren’t used in more than one menu item. Reducing portion size could also have a big affect on your profit, as long as the portions aren’t made small enough that it causes customer dissatisfaction.
You get the idea. There are a lot of costs that go along with operating a restaurant startup. In the beginning, you may not know how much you can or should spend on those costs. Once you have been operating, however, it should become clear where cuts can be made. If you make wise cuts to your costs, your restaurant should see an increase in profit.