6 Ways to Improve Tight Margins in Your Restaurant

| 4 min read

6 Ways to Improve Tight Margins in Your Restaurant

With the past two years of Covid behind us, we would all hope to start seeing great margins come back. However, even in a post-Covid time, there are still a lot of things that are jeopardizing those margins. Things like higher food costs, supply problems, and consumer behaviors have changed.

Restaurant owners now see trends of even tighter margins in the industry. Currently, full-service restaurant profit margins are between 2-6%, while fast food or food trucks hover around 6-9%.

But don't be distressed by this news as savvy managers learn ways around this new normal. So, lock in on these unique ideas for increasing your margins!

1) Delivery and Carry-out

Opening margins at a restaurant

Delivery and carry-out became a saving grace for a lot of restaurants during the Lockdown and throughout most of the pandemic. Most restaurants found this as a way to make sure they stayed relevant throughout this time, and if you managed to make it through without these services, it might be time to see if it's right for your business. 

During, and now well after COVID restrictions were a part of everyday life, consumer needs and wants have changed. Although there are plenty of people that still want to have the option of taking their family to a restaurant and sitting, ordering into homes has become part of a new norm. Some businesses even left brick-and-mortar stores and just purchased food trucks instead. 

The fees that delivery services like GrubHub and DoorDash can carry a heavy burden to tight margins, so it's important to refer to your financials to make sure that it's not causing friction against your profitability. Not offering the service may also cost your business customers, so you'll also have to decide if it's right for you.

2) Employee Training

One of the best ways to improve income is through additional sales. Train your employees to upsell items like alcoholic beverages or desserts. You might even consider incentives for employees who accomplish a certain number of these types of upsells.

Or sponsor a contest among your employees centered around the highest amount of cover average. Appetizers and side orders are another way to increase customer sales.

Additionally, employees should understand the importance of not wasting food or supplies. Teach kitchen staff to ensure that food is prepared correctly and never overcooked to cut down on waste.

Encourage the use of measuring cups or use pre-measured ingredients to avoid over-portioning.

3) Menu Strategies

Figure out the profitability of menu items by using your POS or inventory software. Since food costs are a huge part of your budget, remove any items from the menu that aren't especially profitable.

Change the menu to push more lucrative dishes by using larger fonts and more descriptive content. Redesigning your menu allows you to highlight these items.

Offer special pricing when a dessert or side item is purchased with an entree. Although you are taking a little less, guests are more likely to spend more this way.

Take advantage of in-season fruits and vegetables and establish a first-in, first-out rule on perishables. If you find yourself with a surplus, use recipes that include these items to advertise a special for the evening.

4) Add Variety

You might need to think outside of the box.

  • Is your restaurant famous for its special sauce? Maybe it is time to stock this product for sale at your restaurant!
  • Feature a take-home box for family night cooking.
  • Hosting events for the community or fundraisers is another way to bring in more business.
  • Partnering with other businesses provides more exposure for them and you. Find someone whose products complement yours. For example, a chocolate store might partner with a wine store for a Valentine's Day event.
  • Join food truck events or festivals to promote your business.

5) Labor Costs

Labor costs are a major part of the cost of goods sold. Wise management of employee time and scheduling saves money.

Utilize a strict clock in and out system and keep an eye out for employees who abuse the system. Also, consider strategic ways to schedule employees who work well together or are good at upselling during the busiest times.

Ensure that employees receive appropriate training and that everyone stays happy. One of the largest causes of turnover is due to stress at work and burnout, which can be reduced by spending time training. Satisfied employees won't leave, and management can spend more time getting new customers in the door, and less time training new employees.

This is a cost-saving as well. It also equates to employees who want to see your restaurant succeed.

6) Utilize Influencers

Social media marketing comes with a huge mix of reviews. It can be time-consuming and not feel like it can make a direct impact on ROI. Marketing is an essential part of growth, and social media can be utilized to drive more long-term business. Even better, Millennials and Gen-Z are not only very active on multiple social media platforms, both generations spend more on meals and entertainment than any other.

Search for people who have left high reviews on your Yelp! or Google profiles. Active reviewers have their total amount of reviews displayed in their comments and their profile, so it's easy to see who would be worth reaching out to. Reach out and ask if they'd like to come back and share their experience.

There are social media influencers who have built a large following around food. And their audiences look to them to understand where the next place they should spend their money is at.

Rather than spending years trying to build a following of your own, look for those who are taking an active role in taking photos of their food, have large foodie audiences, or talk about food in their profile descriptions.

Reach out to these influencers and invite them to try your cuisine. Send a menu, provide a story behind the inspiration for the restaurant or its menu, and let them know who your audience is, and what the ambiance of your restaurant feels like. They can share all these nuggets with their followers. 

You don't ask for them to post or share, either. Everyone and their grandma do that. If the experience matches the information you shared, they'll do that anyways. 


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