Why are restaurant profit margins so low? From rent to labour costs, restaurants have a number of overheads. And it’s a highly competitive industry. If you raise your food prices, you may lose customers to competitors.
Keep reading to find out how to increase revenue and reduce costs.
Put simply, profit margin is the percentage of revenue that’s left after all expenses have been deducted. It shows the profitability of a product, service or business. The higher the percentage, the more profitable the business.
Paperwork is resource heavy. Embracing digital tools improves efficiency and helps reduce costs from maintenance callouts, to insurance premiums to stationary costs.
Investing in onboarding and ongoing training can help reduce staff turnover rates, which is a huge expense for hospitality businesses. It also improves job satisfaction, and makes employees feel appreciated, challenged and more productive in their jobs.
Reduce energy consumption
Simple changes like switching to energy-efficient equipment and turning off kitchen appliances can help hospitality businesses fight increasing energy prices.
For more tips on how to save energy, check out this blog.
According to the Green Restaurant Association, the average restaurant wastes between 25,000 and 75,000 pounds of food every year. Not only does food waste emit greenhouse gas emissions, but it’s expensive too.
You can reduce food waste by using more local supply chains, designing a plant-based menu, and improving stock management. We also recommend using an inventory management system like Simple Order or MarketMan to stay on top of stock levels and avoid over-ordering.
The popularity of online delivery skyrocketed during the pandemic. And many restaurants started doing online deliveries. If you don’t offer online delivery yet, now is the time to start. It is a great way to increase your restaurant’s covers without increasing other overheads.
Teaming up with third-party delivery apps can also help you acquire new customers by improving your discoverability.
The more customers you serve per service, the more revenue you can make. The best way to speed up your turnover is to implement efficient processes and better workflows to maximise output. Equip your teams with the tools they need to be productive, and get out the way.