There are two schools of thought when it comes to increasing your restaurant profits:
- Focusing intently and without emotion on the numbers themselves (which is good)
- Focusing on the more emotional customer side of things.
The restaurant business is often so competitive that many of them fail within the first couple of years. However, one area that each successful restaurant has down is knowing how to adapt and steer the ship through stormy waters. The most successful way to do this is to increase sales (as they say, sales fixes all business problems). Off we go then...
Secret #1: Adapt to Your Target Market's Wants and Needs
I know many restaurant owners who have an ego the size of Canada. They are all about themselves and they do what they think is the best for the restaurant based on his/her own wants and needs. This is like crawling in bed with your lover and saying, "Don't worry, I know what I want. Just lie there and enjoy my pleasure."
Sorry if that's a little right-in-your-face for you, but it's an accurate analogy. As a restaurant owner and manager, if you want to increase your profits, sales and the butts in your seats, give your locals what they want. Not what you want.
In addition, nothing should stay stagnant. In an ever-changing world, change is your best friend. However, this doesn't necessarily mean constant drastic change because that's just plain disorienting.
Knowing your target market lets you know what appeals to them at present. The challenge is how you can create ways to meet those preferences efficiently. Surveys and polls can help you get a sense of what your customers want and think of your restaurant (the best way to do this is collect their email; more on that in a minute).
That being said, it's also important to figure out which menu items appeal to most of your returning customers. This will give you an idea of which menu items pair well together. In fact, Upserve's POS system provides an amazing menu matrix that tells the owner not only the most popular dishes, but how often first time guests come back after ordering certain dishes. It's truly remarkable.
This knowledge allows you to get rid of the losers and advertise and highlight the winners, greatly increasing your profits. In general, a more personalized menu will emotionally appeal to your target market and, in turn, increase returns and eventually, profits.
Secret #2: Be Present, Be Seen, Be Available
As Grant Cardone says "Obscurity will kill your business." In an era of social media, it's vital to be available and be present online. Many restaurant owners are still old school, focusing on outdated restaurant marketing techniques and they never create an online presence. According to a study by Pew Research Center in 2018, 96% of Americans own a cellphone of some kind. As you are well aware, these smartphones are used to do everything and anything online. In 2018, 58% of site visits were from mobile phones.
The Captain Obvious assumption we can make from this is: people are online. All the time. They buy new clothes, appliances, furniture from a store's app. Review websites about restaurants or places are easily accessible through mobile, as well. The more visible your restaurant is, the more accessible it is.
When you create an online presence for your restaurant, you welcome new and old customers. While having a website used to cut it, the market today demands accessibility. Facebook, Instagram and Twitter accounts are great ways to connect to your target market.
Announcements and posts made through these channels often reach a wider audience. Posts also remind your existing customers that your restaurant still operates and exists. Things like promos, an unexpected adjustment in operation hours, giveaways, and events are then easier to read and know about. Customers will be able to know what's new with your restaurant.
Aside from this, listing your business on Google My Business will definitely help. Include listing your address, operation hours, phone number, and photo of the location. This will allow existing customers to leave reviews, as well as post photos of your food and services.
Secret #3: Customize and Personalize Your Services
As mentioned in the first two tips, it's imperative that you remain visible and adapt to an ever-changing market. That being said, it's important to let your customers feel that they are a part of the restaurant. People often return to restaurants when they feel like they belong to the community and are heard, and as you should already know, repeat customers are the most profitable customers of all. 5 times more profitable than trying to acquire new customers.
A great example of customizing your services is adapting to the community's needs. As of writing, there's still the pandemic in the midst of 2020 and almost everyone is encouraged to stay home. Offering curbside pick-up or offering restaurant delivery services are great ways of addressing that and allowing your business to stay afloat. The option of curbside pickup gives your customers what they've been craving, without the exposure.
Some think that adding a delivery service requires an increase in manpower. However, you can easily start your own in-house delivery service by following a few simple steps. In addition, there are many third-party delivery service options that could cater to your customer's orders through an app. Food delivery apps like Grubhub or Postmates are perfect examples of making things easier for customers to order food, though you should cost it out and decide if this is the most profitable way to go, as many 3rd party delivery services charge up to 40% and many restaurants actually lose money with this strategy.
In the end though, most customers would opt for online ordering rather than calling through the phone because it's more accessible. It's smart to also allow various payment options such as online payment or cash on delivery.
Another way of customizing your services to suit the community's needs is offering a drive-thru or take-out window. Items like cutlery, tissue, and condiments should be stocked well and easily accessible from the take-out window. Aside from this, you can also create a custom take-out & delivery menu with items that best travel well. These should be items that won't require much presentation.
Secret #4: Collect Customer Emails
Don't skip over this one unless you want to go ahead and throw out one of the most (if not THE most) powerful marketing techniques ever, for restaurants or otherwise. We go over this in depth in the Restaurant Management Masterclass, in the Email Domination section.
Now, we know that collecting emails might seem like a pain-in-the-ass, but when you have a list of a few hundred, or a few thousand customers, those are customers that you don't have to pay for in order to market to them. How amazing is that? With email marketing, you are able to send targeted emails to people who voluntarily provided their email, which is them saying, "We like your place and we're open to hearing what you have to say in the future." That makes them warm leads.
How to Collect Email Addresses
There are a plethora of ways to collect email addresses. You just have to get creative. A few ways are:
- Provide a line for them to write it in at the bottom of their bill
- Ask them to sign-up for your birthday club (or any other club you create)
- Give them something free (appetizer or dessert) in exchange for the email
- Start a customer rewards program
- Add an optin email option on your website
- Hold a contest that requires them to provide email - winning email picked out of hat wins something
That's only a start. All your guests need are an incentive.
What to Email Them
As we cover in the Email Domination series of the Masterclass, you want to create stories, not coupons. People do not connect with coupons. Not that you can't send an offer here and there. That's fine, but you want to create lifetime customers and the best way to do that is to share stories about your staff, your food, your philosophy and culture. Get them excited. Make them a fan. The more you connect with them, the more loyal customers you will get.
And speaking of loyal customers...
Secret #5: Appreciate Your Loyal Customers
Everyone likes to feel appreciated and welcome. If attracting new customers is important to your restaurant, making sure that your loyal customers is as imperative. In fact, your loyal customers are often your restaurant's form of free advertising. 84% of people are more likely to trust a friend or relative's recommendation rather than a paid advertisement.
Customer loyalty rewards programs for restaurants are great ways to let your patrons know they're appreciated. Customers can collect points and exchange them for entrees, desserts, and discounts. A lot of restaurants have loyalty rewards clubs or programs because they're great ways of both appreciating existing customers and encouraging new customers to keep coming back.
Another great way of maintaining customer loyalty is hosting exclusive events for loyal customers. Exclusive menu tastings, beer tastings, cooking classes, and other events make it fun for customers to return to the restaurant and educate your customers about your products. They also build the sense of community within your restaurant. Events could also be held in honor of local charities or beneficiaries.
Secret #6: Learn and Master the Upsell
Ok, upselling isn't much of a secret anymore, but it is still highly effective. For those of you late to the show, upselling is a sales technique that encourages your customers to spend more by either offering an upgraded or more premium version of the item they're ordering, or by suggesting add-ons to their meal.
The Premium Upsell
Customer: "I'll have a vodka/soda."
Server/Bartender: "Sure, what is your favorite brand of vodka?" or "Sure, what brand of vodka would you like?"
4 out 5 times, this question will prompt the customer to pick a more premium brand that brings in more profit. They do this 80% of the time because 1) people love to identify with a brand, and 2) people don't want to appear cheap in front of their friends.
The Add-on Upsell
Customer: "I'll have the burger with fries."
Server/Bartender: "Sure, would you like to add any avocado or bacon to your burger."
Customer: "Sure, that'd be great."
Server/Bartender: "Ok, great. Would you like regular fries or you can upgrade to curly fries for $1.50 more."
Customer: "I love curly fries. Let's do that."
It's as easy as that. Imagine if every one of your servers and bartenders were trained to ask these questions. Sales and profits would soar.
Of course, as a restaurant owner or manager, it's your job to train and teach your servers and bartenders how to properly upsell without letting your customers feel pressured to buy more. Instead, your employees simply plant a seed that tempts your customers to buy more. The best way to start an upselling technique is simply describing the menu item. After seating, train your servers to describe their favorite specialty drinks. And then ask the simple questions in our example above.
Secret #7: Master Your Food Costs and Bar Variances
This is restaurant management 101. We can't cover a complete lesson on mastering your bar and food cost percentages and variances in this little paragraph, but you should know the basics. Not only should you know how to calculate your bar and food costs, you should know what they should be. In order to compare where you're at compared to where you should be, you can check out the Industry Standards blog post here.
Your bar and food cost percentages are determined by how much you spend (your COGS or cost of goods sold) divided by your sales over the same time period. Your goal is to lower how much you spend on the products you order and increase sales. Food makes this a challenge simply because there are so many perishable items compared to the bar. Wasted food is the #1 cause of high food cost percentages.
In addition, you should have your recipe item costing set (the portion amounts that go into each menu item), as well as a food and bar inventory system for tracking the variance. Bar inventory is a lot easier to count and track than food inventory, but you can still do spot-checking in the kitchen to keep the employees honest. If you monitor your staff and they know someone is watching, the variance will drop and the profits will go up.
Secret #8: Maximize Your Table Turnover Rate
It's common sense: the higher your table turnover rate, the higher the profit. You can't really control the speed at which your diners finish their food (and in fact you definitely don't want to rush them), but you can manage the efficiency of your staff and your restaurant.
There's nothing worse than messy tables just sitting there waiting to be bussed and cleaned with a swarm of people waiting to sit down and spend money at your place.
A great way to manage your table turnover rate is having an organized seating system. Having a hostess stand and accepting reservations make it easier for you to expect and manage the flow of customers coming through the door. Keeping your serving staff on schedule will also help you turnover tables faster and more efficiently.
Mobile hand-held Restaurant POS systems can definitely aid your efficiency and table turnover rate by eliminating the need for servers to walk back and forth to the register to process credit cards, orders, and other requests.
In addition, there is a certain rhythm that goes into serving the guest and guiding them to the next step of the meal. It goes like this:
- Greet guests at the door within 60 seconds and seat them (if no wait)
- Server greets them at the table within 90 seconds and takes drink order
- Deliver drinks within 2 minutes
- Take food order as soon as they are ready
- Put in appetizers/soups/salads immediately
- Order entrees shortly after
- Keep drinks refilled
- Clear plates the moment they are finished
- Offer coffee and/or dessert
- Remove everything from table except drink glasses or coffee cups
- Drop bill
Doing these things in a timely fashion allows the guest to be guided through an excellent experience without being rushed. One of the worst things servers can do is leave dinner or dessert plates on the table after the bill has been dropped. It makes the guests feel as if they aren't finished and they will stay and talk longer. When the table is empty, they feel it's time to leave.
Secret #9: Organize and Stock Your Inventory Wisely
One of the worst things you can tell a loyal customer is how their favorite menu item is out of stock. Likewise, it might come as an immediate turn-off for new customers that their orders are out of stock. The best way to prevent this from happening is properly organizing and taking control of your inventory.
Modern and mobile POS Systems make taking inventory easier, faster, and more efficient. The POS system can simply keep track of which ingredients are constantly used, which are almost out of stock and which ones need immediate replenishing. In addition, POS systems can also now make reports on which menu items are in-demand and which ones aren't, making it easier for restaurant owners and managers to cut down on costs.
Our article on the different POS systems can help you decide which restaurant POS system would work best for your restaurant. Overall, keeping proper inventory will increase profits because it can ensure customer returns, satisfaction, and of course, reduce waste.
And of course at Bar Patrol, we have the fastest, easiest and most accurate and affordable way to count and track your bar inventory, as well as do your ordering and invoicing.
Secret #10: Maximize Your Menu With Menu Engineering
We touched on this earlier when talking about item costing. More often than not, it's the simple things that can cost us. Improper pricing will go one of two ways: letting your food costs eat up your restaurant profit margin or have no customers at all.
When creating a menu, it's important that food costs should be kept at at least an average 33% of the menu price. It's also important to remember that ingredient costs often change. So, it's better to add a bit of padding to the prices to anticipate any price hikes.
Besides menu items costing, menu engineering is a powerful technique to get your guests to order your most popular items and (more importantly) your most profitable items. Menu engineering has to do with highlighting and placing your most profitable menu items where the customers' eyes will scan them the easiest.
There are many menu engineering techniques that we won't cover here, but you are welcome to watch this video on how to menu engineer for maximum restaurant profits.
I hope this helped. We'll see you next time.
Cheers,
Dave
