Ways to improve your restaurants bottom line

Posted on July 26, 2016 by blog in

There are array of standards and general business practices that many restaurateurs overlook or even ignore, but when it comes to the restaurant industry, there are probably more than 1000 odd ways for you to lose money. As the old saying goes, “the devil is in the details”, this particular idiom is so true for restaurateurs who are working towards building their bottom line.

Maintaining a healthy P&L sheet is not just a lofty ambition, but actually a requirement in today’s competitive economy. Applying Darwin’s theory of natural selection to the restaurant industry, “Those who resist change and refuse to work towards maximizing profitability become extinct.”

To save you from the high risk of extinction, here are some ways to help you improve your bottom line:

Know your costs:

Prime cost is the best indicator of your restaurants profit potential and how well your costs are managed. Restaurants who do not have control over their prime cost have very poor P&L statements. As a restaurateur if you aim to maximize your profits you would need to know your costs at the end of every week. So how do you calculate Prime Costs? If actually, very easy.

Prime cost = food cost + beverage cost + salaries & wages + taxes +benefits

Not knowing your prime cost is one of the top common restaurant sins committed in the restaurant industry. With the launch of internet – based tablet POS systems, that allows restaurant owners to not only monitor sales, but at the same time, access restaurant CRM data, run through labor reports or analyze menu items sales report and food cost on the go, making your old excuses of not knowing your costs obsolete.

Give your Menu a check:

Let’s be real, the days of excess are gone. Today’s customers are savvier and quality conscious. When they see a large menu, they know that the quality of the food served is going to be questionable. A small menu means faster service, higher control over the quality and higher profits. Re-engineering of your menu at regular intervals is a smart move to get rid of the load from your menu )those items that are less popular with low profitability).

Analyzing your product mix / menu list reports from your POS systems would give you a better comprehension of what your customer are really ordering. And here’s a clever marketing tip: When you know what your customers want, give them more of that! Common sense, right? But as we all know, common sense is not a common practice.

Get rid of poor performers

We all as business owners come across a situation where we have some staff who are just poor performers? I am sure you must be having at least one or two. Come on, be honest with yourself. In case you do, then you need to let them go.

Letting staff go is not an easy task for most owners, however poor performing staff tends to make more mistakes which could costs your business, as well as they also do not provide satisfactory customer service (which again costs you money). Hence the decision of getting rid of your poor performing staff will not only help you improve your bottom line, but will also improve your team morale.

Remember, “Happy employees make customer happy and happy customers are always good for your business bottom line”.

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