With signs that the American economy may be ready to slowly begin reopening in the coming weeks, restaurant owners – a group that’s been hit harder than almost any other industry – need to begin thinking about how they can reclaim lost profits.
4 Ways Restaurants Can Maximize Profits After Economy Reopens
Just how badly has the restaurant industry been impacted by COVID-19? This graph from Statista says it all. It shows the year-over-year daily change in seated restaurant diners from 2019 to 2020.
As you’ll notice, the impact was minimal at first – with drop offs of a few percentage points in early March. But by the time March 12 hit, numbers were down by 28 percent. And within a week they were down by 98 percent. On March 21, numbers were down 100 percent (and have been since).
The longer this pandemic causes restaurant shutdowns, the harder it is to stay afloat. But thankfully some states are now allowing restaurants to reopen (with certain restrictions). Once you get the green light to serve dine-in customers, the following tips can be used to beef up profits:
1. Reestablish a Strong Foundation
It’s been a while since your business has had any sort of normalcy. Now’s the time to get back in the groove and establish/reestablish good habits and practices.
Preventative maintenance and care on commercial kitchen appliances is one example of this. The more you can extend the life of these expensive investments, the more profitable you’ll be over the next few months and years.
“While cleaning is the first step in extending the life of your appliances, the care of these commercial machines must go beyond soap and water,” McCombs Supply Co. Inc. explains. “You’ll also conduct regular checks on parts, performance, and calibration to maintain the efficiency of your industrial units, and to make sure they remain in good working order.”
It’s also important to reevaluate the types of people you’re hiring. It’s worth paying more for a reliable and trustworthy person who is a self-starter and fast learner than it is to pay minimum wage to someone who only cares about cashing a paycheck.
2. Focus on High-Profit Menu Items
Every restaurant has its own thresholds and standards, but it’s generally a good idea to keep food costs to an average of 33 percent of the menu price. In other words, a $9 menu item should cost you $3 or less to make.
The 33 percent threshold is something you want to average. And since you’ll almost certainly have items on your menu that are much higher – like steak or seafood – it’s imperative that you focus on integrating higher profit margin items into your menu. (Even if they’re brand new items.)
High-profit menu items include fountain drinks, coffee, alcoholic beverages, soups, pizzas, desserts, children’s menu items, and breakfast items.
3. Use Promotional Tactics
Get creative with how you promote your restaurant. Things like daily specials, family meal deals, and happy hour pricing are great ways to get people into your restaurant. And if you have the right strategies in place, this can lead to higher average order sizes.
4. Add New Sales Channels
If the COVID-19 shutdowns have taught restaurant owners anything, it’s that the marketplace is open to new sales channels. While you might have started doing delivery orders as a result of the shutdown, it may be worth keeping this sales channel alive even after life returns to normal. People have gotten a taste of delivery and will be more open to it as a staple option in the future.
Make Profitability the Top Priority
Profitability isn’t everything in business. There’s so much more to running a successful restaurant than focusing on how much cash you take in at the end of the day. But we’re in a bit of a unique spot and profits will take center stage in the coming weeks.
We’re not saying that you should focus on profitability at the expense of treating customers well and providing good food. But we are saying it needs to be a point of emphasis for every employee on your payroll over the next six to nine months.
By increasing profits over this period of time, you can recoup some of the losses that you’ve experienced in recent weeks and, hopefully, restore your restaurant to its former glory.