The 5 Simple Steps to Increased Restaurant Profitability

Everything a great marketer does is always by the numbers.  We are constantly searching for greater profit from existing sales and increased profit from new sales.

There is one proven tool that controls both of these and can save you a great deal of energy and wasted time.

It is the 80-20 rule.

While it may not be as graceful as the Fibonacci flower, it is as valuable as Fibonacci Golden Ratio or Retracements for investing.

STEP 1

Look at your sales by item for the last week.  If the list is too long, this should be your first hint.  What you’ll find is that a vast majority of your sales come from very few offerings.  Highlight your Top 10.

Tangled Garden Breakfast menu

STEP 2

Next, select the bottom 10 items.  Determine the number of hours it takes to prep these.  Then factor in the cost of ingredients in these items and finally and very importantly, the level of waste as compared to the top 10.  All of this need only be ballpark estimates, not precise to the penny calculations.

STEP 3

Accept that your customers are often coming to you for the specialty, that you are known for.  They can go anywhere else for the low selling items, but they want what you do the best and as creatures of habit they want it every time.  Hence in their eyes, this item offers them the best value (not necessarily the lowest price).

This step requires you to fully embrace and accept FOMO, the real killer of profitability.

FOMO ……..Fear Of Missing Out.

Cutting the featured menu items in the above would increase profit and reduce effort immensely.

STEP 4

Update your menu to remove these bottom 10 items.  BUT, tell your staff that these can be prepared, if requested by a customer during the test week (but they will take a little longer, if that is alright with the customer).

STEP 5

Now to the good stuff.  Evaluate the profit on your top 10 items.  The one that stands out head and shoulders above the rest will be the one that you and your staff are going to make every effort to focus on during this Test Week.

You will feature it most prominently in all communication.

  • Endeavor to place it in the upper right corner of the menu
  • If possible have a sign hanging at the entrance or on the street indicating the unique aspect of this dish
  • You will also sample this.
Why is this so tasty?
When the customer is indulging in the sample, be sure to communicate the key benefits

Why Sample?

If you sample this item being sure to communicate a unique aspect or twist you put on it to the consumer, indicating why it is so and providing a bite-sized sample, guarantees you’ll increase sales anywhere from 30 – 200% or higher because you have done 3 things:

  1. You have shown the customer that you care by welcoming them and engaging them in conversation and put them at ease
  2. You are now engaging the consumer on your terms, delivering relevant content, hence removing the awkwardness and increasing their comfort factor, while showcasing your team’s talent
  3. By giving customers information (content), you have guided them to what is unique or special about this item
  4. Having done #’s 1 & 2 you will have 30-50% of those who tried the sample buy.  But importantly… this is your MOST PROFITABLE item, so the bottom line will grow exponentially!

Executing all 5 steps will deliver at minimum a 10-30% increase in profit the week of the test over the prior week, excluding food loss from eliminated items.

This top and bottom 10  (80-20) exercise should take no more than an hour and could deliver 100 times this hours rate in profit.  So MAKE the time as it is a smart approach to business.

Business is easy when you work smart first and then and only then do you work hard.

Looking at the numbers may not be your forte, but allocating 1 hour a week will make you richer!  At the end of the first month, this exercise will become a habit.

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