With the pressure of global food prices rising and the labour crunch still very real, the restaurant industry is arguably the most difficult industry to build a healthy, profitable business within. Notorious for its razor thin profit margins, restaurants have to pay for space, utilities, labour, inventory and more before they can pay themselves.

Keeping tabs on your margin in the midst of all these costs can help you ensure your business is successful in this climate.

First things first, what is a restaurant profit margin?

The formal definition of “profit margin” is the amount by which revenue from sales exceeds costs. Put simply, it’s the difference between how much money you’re making compared to how much you’re having to spend.

Most restaurants see a profit between 2-6%: when we said razor thin margins, we meant it, but this number can vary based on location, labour cost, inventory and more.

If you’re within this 2-6% range, don’t worry. In this article, we’ll teach you three simple tips to increase your revenue and boost those margins.

1.Constantly keep tabs on your restaurant’s financial metrics

The first step to improving anything is having a thorough understanding of it.

If you want to improve your restaurant’s financial metrics, you need to understand where you’re starting from.

Here are the top numbers to watch:

  • Order volume
  • Gross sales
  • Average order value
  • Average sales per store
  • Store ranking
  • Channel performance
  • Fulfilment performance.

Why is this helpful? Imagine you work with Uber Eats, DoorDash and Deliveroo. Being able to compare delivery partner sales lets you know which platforms work best for your restaurant and which could use some attention.

2.Let automation help you reduce your operating expenses

Hiring in 2022 is hard. The labour shortage is no joke. There are fewer people willing to work at restaurants, and those who are may be expecting increased pay for their hours.

Nothing will replace the role of humans working in a restaurant, but there are certain tasks that can be automated to reduce your operating expenses.

  • Reservations: Use a reliable reservation management system such as OpenTable that allows you to better keep track of bookings and take phone calls off your staff’s plate.
  • Online Ordering: Save on delivery commissions and staffing costs with your own online ordering system. Direct Orders by Hubster allows you to streamline orders into a single POS with a digital menu and enhances your dine-in experience with QR code ordering.

Let’s face it — the more thought you put into your menu, the more money you’ll make.

  • Order Management and more: Say goodbye to tablet hell and missed orders with Hubster’s order management solutions. Features like order auto-acceptance and automated promotions can save your staff time, on top of helping you increase sales and efficiency.

    3.Make sure your menu is designed to be profitable

To create the best menu for your bottomline, get a handle on your inventory, food costs and aim for your food cost percentage (FCP) to fall between 28-32% to maintain healthy profits.

Why? You want to know exactly how much it costs to make a dish so it’s easier to experiment with options that keep customers happy without hurting your margins. 

Knowing which are your higher margin items also means you can be more strategic in placing bestsellers at the top of your menu or culling menu items that aren’t raking in their full potential.

Hubster helps restaurants generate revenue by increasing their presence, automating delivery operations and improving reporting processes. Click here to try Hubster today with one month FREE, just for Hospitality Magazine readers.

If you’re looking for more ways to boost your bottom line, download our free guide to 8 Ways To Maximise Your Restaurant Revenue without Sacrificing Margins.

Leave a comment

Your email address will not be published. Required fields are marked *