7 Circumstance That Affects Your Restaurant Profit.

Many people open a restaurant thinking if they have the most delicious food in town, people will flock to their doors. Yet, they ignore the basic principles of the restaurant business and undoubtedly join the 80% of restaurants that fail in the first five years.

What’s the key to success? How do you avoid failure? The key is to maintain at least an average and preferably a much better than average profit margin each year.

To help you manage your profit margin and keep your doors open, let’s look at 7 factors that affect your restaurant profit.

1. Outdated Website

Potential customers are looking for you online. If your website isn’t up-to-date and mobile-friendly, you’re going to lose business.

Make sure your phone number, location, and menu are front and center on your website so you don’t lose potential customers and in turn your profits.

2. Customer Retention

Did you know it’s cheaper to retain a customer than it is to acquire a new one?

Yet, many restaurant owners pour their marketing dollars into acquisition instead of retention.

Make your customers feel valued, and in turn, they’ll give you loyalty. As a bonus, those loyal customers will tell others about you so you are not only retaining a customer but perhaps getting a new one.

One great way to increase your retention rate is to put a loyalty rewards program into place.

Reward customers for their loyalty, and you’ll see your profits rise.

3. High Wait Times

How long your customers have to wait for a table or service at your restaurant affects your profit.

While that may seem counter-intuitive because a busy restaurant is a profitable one, it pays to look at why you have high wait times. Here are some things to look out for:

  • Customers are waiting too long from the time they initially sit down to when the server takes their order. This is a dead time when no profit is being made.
  • Your kitchen is slow, and people are waiting for their food. This causes a bottleneck, and your tables don’t turn over as quickly.
  • You don’t have enough staff on hand to take care of your customers. Not only does this halt table turnover, but it creates angry customers who may not be back.
  • High wait times are caused by overall poor customer service.

Take a long look at what’s causing your high wait times. Fine tune any processes that aren’t working well.

4. Employee Turnover

Most restaurant owners don’t take employee turnover into consideration when thinking about profits, but it can take a chunk out.

The restaurant industry is known for its high turnover rates, so losing staff is nothing new. But, did you know that employee turnover costs you thousands?

This is because each time you have to onboard and train a new employee, it costs you money and lots of it.

Take some steps to improve your employee retention rates. This may be through better pay and an increase in benefits.

Don’t forget a few other areas as well:

  • Employee morale – treat your employees well by acknowledging their hard work with a thank you.
  • Offer advancement opportunities.
  • Train your employees well on an ongoing basis.
  • Invest in leadership training for your managers so they know how to lead.

 5. Employee Theft

You may not want to think about it, but many restaurants have high theft rates among their employees.

Staff see an easy meal and take advantage of it.

Combat employee theft with a good system in place to track your food costs. Take inventory often and know exactly where your food is going.

Additionally, if you offer staff a meal before or after their shift, consider keeping it to a set menu. This keeps them from eating those items on your menu that cost you a lot to prepare.

6. Food Waste

Food waste is a tragedy.

Take a look at how much food your servers are throwing away after each meal they serve. If it’s excessive, your portion sizes are too big.

In addition, you can reduce food waste by using as much of each item as you can. For example, use your chicken bones and vegetable scraps to make a broth.

Another way to avoid food waste is to manage your inventory. For example, you don’t want your chef throwing away three heads of lettuce each week because you ordered too much.

 7. Labor Costs

Are your employees abusing your time clock? This is worth a look every pay day.You want to make sure they’re clocking in and out when they are supposed to so you aren’t overspending on the payroll.

You want to make sure they’re clocking in and out when they are supposed to so you aren’t overspending on the payroll.

Get a complete solution for the restaurant.

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One thought on “7 Circumstance That Affects Your Restaurant Profit.

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