Building Your Profitable Restaurant Business

The huge effort and struggle to get your restaurant open is unfortunately only half the battle of creating a profitable restaurant. From that point on it will take a dedication and effort to make the money flow. There are many aspects that come into play where profitability is concerned. Knowing your target market well is one of them. It’s important to stay up to date with the current and changing trends of your chosen demographic.

A Long Term Profitable Restaurant?

Many restaurant owners seem to have a difficult time with rent versus lease. It is one of those unavoidable bills that can cripple you in the future if the lease rate climbs. In cities or countries with booming economies rents are still climbing. In areas that have been hit hard by the economic crisis it is easy to get a good lease rate. But, once the economy really turns, these rates could escalate very quickly. Some landlords want a month to month rent deal that can escalate at any time! Leasing might be a better way than month to month because the terms are locked in and the rent cannot be raised on you (at least not more than yearly). If you can afford to find a way to buy your property (remembering location is a major concern), you can lock in your future costs. Perhaps reading some of those "creative" real estate investing books would be a good idea.

Watching Wage/Food Cost Ratios Creats Profitable Restaurants

Analyzing what you are paying out in wage and product costs versus your overall income can show you where money is being wasted. Don’t be afraid to negotiate pricing with suppliers and keep your staff scheduling tight. I'm amazed at how many people ask me for help with their restaurant, and when I ask them what their ratios are, they don't know! It is the owners job to keep a close eye on income and expense, keep your pars up to date, etc., If you don't, you won't know whether you are truly profitable or not.

Another important part of improving your profitable restaurant is your menu pricing. Do a little research and keep up on the industry standards. A quick rule of thumb. Calculate your input costs (the cost of food) and then triple that. Of course, those percentages vary from one restaurant niche to another.

You need to know what the competition is charging so that you can stay fair and competitive in pricing.

Keep an eye on the little things. You know the old saying, "Watch the pennies and the dollars with follow!" Staff meetings with the servers are recommended. This is a good way to be sure the servers are informed of what dishes or drinks they should be mentioning to the customers. Not only that but the servers are often what will keep or drive away customers, or have them becoming regulars (YES, even more than your food!) Knowing your staff well and creating a good working relationship can help in this area as well. No matter how good your food is poor service will stop customers from returning.

Little things like what goes into the garbage each day should be carefully examined. Often unused sugar and cream packets will end up there and this can really add up over time. Not only that but researching food costs can help save money when certain items can be bought cheaper in bulk or through other distributors. A profitable restaurant takes commitment and plenty of work.