Improving Profit Margins Is Easier Than You Think

As industry operational standards increase – so do costs. From organic or specialized menu offerings to sustainable practices and from implementing innovative marketing and communications programs to upgrading back office technology – it can all add up quickly.

But, there are some uncomplicated ways to upgrade systems and improve profit margins, without over-taxing your resources or your sanity.

Focus on Food Costs

Help streamline overall food costs by:

1) Buying in bulk. Planning menus in advance makes the cost-saving method of buying in bulk much more feasible.

2) Promoting lower-priced food items. Give dishes that are cost-effective to prepare highlighted positions on the menu to increase sales.

3) Overhauling standing menus to eliminate high cost items. *NOTE: If there are a few key dishes with high-cost ingredients you just can’t part with, try reinvigorating them regularly with seasonal ingredients and feature them as specials. This will keep dishes fresh and still on your menu.

Upgrade Technology

Revamping technology and equipment such as computers and data templates is well worth the initial investment, as these upgrades will help simplify everything from timesheets and vendor orders to budget analysis. Typically, the initial investment is recouped in a short timeframe, which always helps the bottom line. Implementing social media, and promotional marketing and communications tactics to maintain a consistent brand voice and guest outreach will help to drive more guests to your location and encourage guest interaction.

Implement Green Practices

Going green might take some research, but switching up habits to recycling paper, glass and cooking oil are just the start to being more sustainable. Installing LED lighting and energy efficient appliances are other green practices that are not only sustainable with great longevity for your restaurant, but will also prove cost effective measures. Case in Point: As reported by the National Restaurant Association’s Food Service Technology Center, something as easy as attaching low flow spray valves to faucets could save restaurants as much as $1,000 a year in water costs!

Renegotiate Contracts or Change Suppliers

Just another reminder that ‘Business is Business.’ Renegotiating vendor contracts or changing suppliers (if you don’t get the outcome you hope for with current vendors) isn’t personal – it’s business – and it can be an easy conversation.

Conducting an audit of all contracts and looking to see where improvements can be made is a great place to start. Maybe it is signing a longer-term contract to lock-in fees and low rates, or perhaps agreeing to purchase more from a vendor can improve your fees … whatever the deal, make sure the terms fit your needs.

Mitigate and Prevent Shortfall

Because the restaurant industry regularly faces ups and downs in revenues, balancing books and having a financial business plan foundation (i.e. an overview of all operating costs) in place are essential for securing premium profit margins. We call it Profit Architecture, and it’s a foundation that addresses all costs and weighs all possible variable income factors against those costs to comprehensively estimate the best possible outcomes – it’s about profitability. Ideally, your operation should perform at maximum capacity, with premium profit and increasing returns as each year progresses.

Proceed gradually in order to make these ideas more than just some overreaching suggestions; to work effectively, these must work within your business structure. And work with your team to execute and manage all aspects of implementing cost effective practices … they will embrace, own and feel responsible for the outcomes, restaurant failure, and that will help you get the results you’re looking for!