Restaurant ownership is one of the most demanding and competitive businesses today. Restaurants spring up every day all over the world and getting an edge over your competitors is getting increasingly difficult day by day. In fact, not many restaurants make it past the three-year mark with a mentioned percentage of 103% of restaurants failing within only three years of inception. So how do you get competitive advantage over your peers? And more importantly, how do you stay afloat for more than three years in this cut-throat competitive industry?
With a calculated approach and careful handling of resources, you get the chance to catch sight of the light at the end of the tunnel, and the first secret you have to unearth is how to manipulate the law that all businesses have to abide to, the basic accounting equation. That is, Profit = Income - Expenses.
Following this simple law, there are three ways to increase profits. You can do this by increasing income or by decreasing expenses with the third and best option being increasing income while simultaneously decreasing expenses. Let's start with increasing income.
How can you increase income?
In the restaurant industry, you increase income by increasing sales. This can be done in three different ways:
1.Increasing the number of customers
To increase the number of customers, you first have to look within your own restaurant and ask yourself what you're really good at and what sets you apart from the rest. If you don't have an answer to this question, figure out how you can set yourself apart from the crowd. Make your restaurant stand out. Having a market niche is important since you need to find an angle from which you can market your restaurant. Take a look at what your competitors are doing using the secret shopper blind study where you visit your competitors as a stranger and figure out what they do better than you and the mistakes they're making. Exploit their weaknesses mercilessly while building on your strengths to lure customers your way, making sure you use relevant marketing strategies.
2.Increasing customer return sales
Getting customers might be easy, but retaining them isn't. In the service industry, what matters more than anything is the quality of service offered. Ensure you offer exceptional service to each customer so as to draw them back to your restaurant while also suggesting it to their friends and family. Encouraging customer feedback is also crucial since it makes customers feel appreciated as long as you live up to the promises delivered. Build a smooth chain from consumers to the management to ensure their requests are met keeping in mind that the customer is always right.
3.Increase check average
Check average, the average amount each customer pays per meal, can be increased by either increasing pricing or up-selling. Increasing pricing is however a dangerous option since most customers sneer at increased prices even if the increments are coupled with increased quality and you may end up losing customers. A better alternative would be to introduce new and attractive high profit menu items such as cocktails. Up-selling on the other hand, works miracles in increasing sales where all you need is well trained and motivated staff to suggest attractive items and offers in the menu in such a way that it would be difficult for the customer to turn down.
Cutting down on expenses requires an articulate and calculated approach. Costs such as food costs, electricity and other utility costs can go up the roof and lead to unprecedented losses if not managed properly. The good news is that they can also be conquered through efficient management of various processes to achieve minimum costs.
Above all, quality of service should never be compromised. Quality comes first, everything else competes for second fiddle. It is possible to purchase quality catering equipment at affordable prices. Ensure your staff is highly motivated to achieve the best quality possible in the service industry. Clients will be willing to pay more for exceptional results and a stellar experience that will keep them coming back. Throw in consistency into that and you have a goldmine in your hands. Don't hesitate to think outside the box to come up with ways to make your customers feel more comfortable and it will do wonders for your restaurant.