When wondering how to increase restaurant profits, there are basically 4 things to think about. Simply focus on these in everything you do, and you will be guaranteed to grow your restaurant business.
1. Get more restaurant customers
The traditional line is that you have to get more customers. 80% of most restaurant managers’ energy is about acquiring new customers. And yes, while this is a legitimate way of expanding the business, it may not be the most strategic, nor the most cost effective. Don’t get me wrong, every business needs to continue reaching out to new customers, but many ignore the existing potential right under their nose while doing so.
2. Get more from existing restaurant customers
What about all those hard won customers you already have? Your customer base is actually your most important way of achieving growth. They already know you, already like you and already have a purchasing relationship set up with you. So now you just need to think about how to get more share of their wallet. Getting more out of existing customers is more often less costly and more efficient than getting new customers. Look at your current customers and ask yourself what other services or products could you provide them? How could you encourage them to use your existing offer more often?
3. Raise prices on your restaurant menu
Are you really sure that you are asking for a price that is equivalent to how your restaurant customer values your service? Approximately 80% of businesses undercharge. Most often people don’t buy on price, and you’d be amazed how you can increase your bottom line today just by tweaking your prices slightly. Don’t be afraid to experiment with some menus and different offers to see what works.
Cut costs, negotiate prices and fees, buy in bulk and get higher margin on what you are producing. Make sure your menu is using the best ratio low cost/high revenue ingredients you can. Higher margin means a better bottom line.
Measuring and metrics as a way to answer how to increase restaurant profits
Of all the theories in restaurant marketing, one of the most crucial to implement is the concept of metrics; of measuring every activity that you do, analyzing its effectiveness, throwing out what is ineffective and doing more of what is.
Good restaurant marketers and business people know that anything you measure improves. If you actively track your sales, they improve. If you track the rate of complaints, you end up with less. It makes sense. If you focus on something and therefore understand what the issues are and what needs to be addressed then you can make improvements. And it is surprisingly something that very few people do, including your competition. So measuring everything that you do can become an effective way of creating a competitive advantage with your restaurant marketing.
It is also a way to see your restaurant marketing in terms of something that can be improved on instead of just as a success or failure. If your restaurant ad doesn’t work, instead of seeing it as a lousy campaign, you can merely improve on it and see how you fare. This is called ‘failing quickly’. What we mean by that is that it is best to try many different restaurant marketing activities in small quantities, look at the results and if you find that it isn’t going to work then move on. In other words, don’t be afraid of trying many new things. Steal from other industries, look what your colleagues are doing, and develop partnerships. Just make certain to measure every single thing that you do, and use that knowledge to take further decisions.
Successful restaurant marketers are persistent about measuring the efficiency of absolutely everything that they do. They try many things and if they are successful, they keep doing those things. If they aren’t successful they eliminate them. These highly accomplished restaurant owners and managers also have a set of standard metrics that they use as benchmarks to better understand their business. Most likely you have some measurements already in place, such as your average revenue per head and the margins that you make on certain dishes and menus. These help you better manage what you produce, how you price, and what you sell. In a similar way there are also very important metrics you can use to manage your restaurant marketing spend and activities. Check in with your community and other successful restaurant entrepreneurs to see what metrics they use and what the restaurant benchmarks you should be aiming for are. Use the free Win Win Restaurant Marketing Return on Investment Calculator to start keeping track of which of your restaurant marketing activities are profitable. The relentless use of metrics is one of the most important secrets of super successful restaurateurs.
If you are wondering how to increase restaurant profits, focus on the four areas above and put in a set of metrics in each of these areas to start making a difference to your restaurant’s bottom line.