How to Raise Restaurant Revenue: Find Your Hidden Costs
Raising your restaurant’s profits without increasing stress can seem impossible. It’s not an overnight process, and though the concepts are universal (generate more money than you spend), how you raise restaurant revenue is multifaceted. Fortunately, it’s much easier than it sounds once you can define what’s keeping your profit margins low. By examining what is and isn’t working, you can enhance your restaurant’s bottom line on many fronts, without compromising that which is working. Let’s look at some often forgotten, even hidden, ways to raise your restaurant’s revenue and sales.
Many factors cut into your profit margins. Are you spending all of your time managing your employees’ benefits rather than running your restaurants? Payroll problems are a common cause of low-profit margins. Tax issues and inaccurately paid overtime can create compliance violations and costly fines too.
These risks might seem unlikely, but they’re easy mistakes to make amidst the rigors of restaurant work and can debilitate a business. Hiring the proper helpers here lets you pinpoint your “profit leak” and plug it up. Some restaurant operators hire a Professional Employer Organization (PEO) to shoulder their payroll burden. A PEO will attend to these administrative tasks so you can focus on the front and back-of-house responsibilities.
Focus On Growth
Once you’ve got those admin tasks running, you can zero in on growing your revenue. A PEO offers many hidden ways to increase restaurant sales. A PEO can:
- Provide overtime training and support. The Fair Labor Standards Act outlines specific overtime rules. Having someone on hand who knows the protocols will help you pay overtime accurately, root out hidden costs, eliminate time-tracking errors, manage leave time, and protect you from potential lawsuits or DOL audits.
- Offer kitchen safety training. With the proper guides, you can teach your team how to handle knives and avoid other kitchen accidents. If accidents are a recurring problem, a PEO can help you locate problem areas through a mock OSHA audit. These kitchen injuries become most costly when a staff member has to take time off to recover, stifling your workflows.
- Help you offer better benefits. A PEO can implement electronic enrollment systems that will save you money and time through innovative HR software. This technology doesn’t eliminate your HR personnel but automates your current processes, freeing you up to run your restaurant. Furthermore, better benefits help you attract top-notch employees.
- Assist with staffing. A PEO can help with interviewing, garnishing employee pay, regulatory compliance, onboarding and hiring, preventative maintenance, safety training, manager training, employee reprimands and terminations, litigation support, and more.
Outsourcing your HR can save your money on errors while spurring economic growth. While the PEO attends to these demanding tasks that eat up your time, you can instead allocate your resources to doing what you do best: running your restaurants. Not only will you make more money, but you will no longer have to spend that money on compliance issues that result in bothersome fines.
Manage your Inventory
There’s an old saying, “it’s not just what you earn; it’s what you save.” You can apply this principle to raise your restaurant revenue efforts, starting with your inventory. You need to know what’s on hand to forecast for the future.
Restaurant inventory management means examining your supply, economizing on what you’ve got, and using this data to make informed purchases going forward. Effective inventory management gives you insight into your business, and while many regard it as tedium, it saves you time, money, food, and energy in the long run.
Try to think of revenue in terms of waste. When your food expires, you have to throw it out. When you throw out food that you can’t sell, you lose money and incur more costs replacing it. If you find that you’re consistently throwing your food out, you might conclude that you’ve been buying too much at a time and can adjust your stock from there. Inventory management programs will help prevent over-purchasing. They provide notifications when you’ve got stock running low so you can replenish it seamlessly. Practicing inventory management is a surefire way to see more money on the revenue slip at the end of each month.
In 2019, the restaurant employee turnover hit a historical high of 75%, according to the United States Department of Labor. That statistic means 3 of every four staff members won’t be with you next year. It’s a staggering figure that plagues the industry and stumps restaurant operators at every segment.
You can reduce your restaurant’s employee turnover rate in a few ways, though. Simplifying your restaurant processes will help. Because the restaurant setting is demanding, many employees feel burned out and leave. You can’t always control the traffic in your restaurant. You can implement safety nets that keep your staff at their best when the environment is at its worst.
Recipe Viewers help your staffing by removing the possibility of errors. These digital recipe books generally come as part of a kitchen display system and provide clear images and recipe directions. Your staff can access these resources in the heat of the moment. These guides help you to quickly onboard new employees and offer them peace of mind that if they need to refer to any recipe, they can easily do it. With images of the finished dish, these solutions also help you keep food quality consistent, even across multiple restaurant sites!
Finally, the added safety measures control food waste. Your staff is far less likely to ruin an entree that you’ll have to remake, and you won’t encounter dissatisfied customers returning their meals.
Kitchen Automation and Other Restaurant Solutions
Though words like “automation” might conjure imagery of robots and SciFi dystopia, they’re much more benign in actuality. For restaurant operators, automation means removing various tasks in the workflow that (as we’ve mentioned before) give you staff more guest-facing time and eliminate inefficiencies.
Kitchen technology can raise restaurant revenue by:
- Reducing waste. As mentioned earlier, meal pacing features, as well as recipe viewers, result in fewer mistakes and comped meals.
- Cutting ticket times. With an integrated workflow that digitally hands off an order from the POS to the kitchen, you shave seconds and even minutes off of every order. With the “guesswork” removed from all kitchen work, your staff can move more efficiently as well, wasting less time.
- Improving accuracy. Recipe Viewers provide a visual guide for your staff that can help new hires and veterans that need a quick refresher. You might also consider the integration between the POS and the kitchen. In the past, someone from the front would run a paper ticket to the back run back, presenting numerous opportunities for error and mistakes. Automating the ticket handoff removes this error, as well as the chance for misreading or losing the ticket itself.
- Off-premise Dining. It’s a dining trend that will only rise as customers seek convenient ways to enjoy their meals outside of your restaurant. Though serving off-premise customers might seem like a significant investment, initially, the added revenue stream you create will more than offset this. Creating a genuinely effective off-premise dining strategy is more than we can cover here, but we readily encourage you to seek some of our other resources. In 2020, it’s no longer a question of if you can do it, but when you should start.
- Onboarding and training. Again, with restaurant employee turnover so high, the time you spend onboarding new staff can severely cut into your profits. With easy-to-use, automated technology, you save time onboarding and getting new hires trained to your restaurant standard. This kind of technological assurance helps you weather the blow when turnover inevitably hits.
Are You Ready to Raise Restaurant Revenue?
Ultimately, raising your restaurant’s revenue isn’t a “quick fix” or a “one-size-fits-all” process. There are numerous ways to do it and through many different channels. The key points to remember are that small initiatives add up to significant gains over time, automating processes saves time and money, and saving money is just as crucial as earning it.
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About the Author
Faith Munsell is a digital marketing specialist writing on behalf of Delta Administrative Services. A Professional Employer Organization (PEO) in Louisiana, the company specializes in benefits and benefits administration, safety and risk management, payroll and tax administration, and human resources management.