With the cost of food going up by up to 25% in the last five years, making a profit from a restaurant is not as straightforward as it may seem.
The hospitality industry offers some of the most profitable businesses, which is why it is among the top sectors for new startups. However, labor costs, legal requirements, food costs, depreciation, and cash flow issues can make it challenging to earn a decent profit from your restaurant.
If you are facing this milestone and want to push your restaurant to the next step, there are various things you can do to kickstart your transformation.
5 ways to make your restaurant more profitable
Profit is the primary goal of any business. That's why we want to help you make a profit. Here are 5 ways to do it:
1. Research and get informed
It isn't effortless to transform your restaurant from its current state to a profitable situation without the right information. As a restaurant owner, you should stay informed of market trends, future projections, current technologies and opportunities, competition antics, profit models, and several other critical aspects.
Researching the restaurant industry and understanding its inner workings will make it easier to plan and strategize for your transformation. You can start with restaurant business forums and networks that will increase your knowledge of the industry.
However, ensure you implement the feasible antics you learn to make the research useful to you.
2. Calculate your food cost and profitability per plate
It is essential to know how much you are spending on providing meals, services as well as the profit each serving attracts.
As a general rule of thumb, the price of any dish or drink should cover all the food and preparation costs required to facilitate its service at the restaurant. These calculations are essential when looking to break-even and establish a profit margin. You can then track the prices and monitor market changes.
You should also manage your food cost weekly and call in external auditing to ensure your ledgers are in order.
3. Cut down food waste
Food waste is one of the prevalent problems in the hospitality industry. Without a proper waste control system, it is not very easy to achieve any significant profit despite enjoying decent traffic to your restaurant.
It is essential to have systems in place that can track food waste, determine why there is waste, what types of waste are most common, and how to reduce the loss. Reducing food waste will eventually cut down your expenses and increase your profit margins.
You can also look into new ways of recycling the waste or adjust the menu to offer only the top sellers.
4. Invest in restaurant technology
Everything is better with modern technology.
In restaurants, technology may offer the unique efficiency you seek to achieve success and profitability. There are several restaurant technologies for tracking inventories, operation costs, sales, and POS terminals, marketing, communication, customer service, safety, and comfort, among others.
Restaurant technologies can help you streamline various processes and operations. Some also seal the loopholes that leave you vulnerable to incurring unnecessary losses. For instance, a modern thermostat or energy-efficient HVAC unit can help you reduce the heating and cooling costs of your restaurant over the years.
Preservation and monitoring technologies can also save you extra bucks on items with a shorter shelf life.
5. Get an expansion loan
Whether your main challenge is getting customers to visit your restaurant or employing enough workers, profitability schemes require some form of monetary investment.
A new software to monitor food waste or a dedicated marketing team to push your restaurant beyond new boundaries will require a financial investment. To transform your restaurant, you need putting in enough investment and providing the best quality meals and services for your customers.
A small business loan can help you upgrade the restaurant, employ more personnel, enhance your marketing techniques, and even improve meal production and efficiency.
It's time to go to the next level
There are several other minor things you can do to transform your restaurant into a very profitable business.
It all starts with analyzing your existing situation and identifying areas you can adjust to either reduce costs or increase sales. It is also essential to market your business and find a way to collect customer feedback. This will help you identify your strengths, areas you can perform better, and those you should avoid altogether.
You should adjust to the unique needs of your customers and restaurant. This includes edging out the competition and standing out to serve a unique niche.
Tell us in the comment section what other ways you believe can tremendously increase the profitability of a restaurant business in your area.