How would you like to increase your profits without the need for a single extra customer in your restaurant?
You know you cook great food. You love your customers. You’re happy with the amount of business you get during your busy periods. But somehow even at your busiest this isn’t translating into profit. You’re afraid of putting up prices in case a dish won’t sell. Undercharge and you’re out of pocket (and potentially devaluing your product). It’s frustrating isn’t it? Your numbers can be confusing, and maybe even a little scary.
It’s often the little tweaks to your costs and sales that can make the difference between a hefty loss, or a healthy profit. And let’s face it, whether you own or manage a restaurant, café, bar or hotel you are in business to make money.
So where do you start?
Until you know your numbers it’s difficult to make the decisions that are needed to increase your profits.
- Do you know how much money you made last week?
- Do you know how much your most popular dish is costing to produce and what profit (or loss!) it generates?
- Do you know what impact a 1% increase or decrease in spend per head would have on your bottom line?
- Do you know the return on your marketing investment from your last promotion?
No matter how compelling your marketing, how amazing your food, how extraordinary your service, and how happy your customers, at the end of the day if you aren’t making money on what you sell, then ……. Well you know the rest.
You have to know your numbers……………..
So if you answered no to any of the questions above it’s time you did know the answers to all these key factors.
- Can I afford to put that on the menu and if so at what price? ~ What is the margin on each product you sell
- What do I want to sell more of to make more profit ~ Which products give the biggest contribution?
- What’s your bottom line profit
- Where to make changes for the biggest impact …and you need to know when this will have a negative impact too!
So I’ve bundled together my 4 favourite tools to help you keep tabs on all these critical areas for your restaurant’s success, so you can get onto the fun stuff of getting more (profitable) sales.
What’s in the goody bag?
1 The quickest way to make a decision on what to charge for a dish….
Recipe Costing Calculator: This is the essential tool that every restaurant or café owner needs so you know exactly what you need to charge and when it’s time to either put up your prices or take it off the menu altogether.
Every time you or your chef puts something new on the menu you need to know exactly what it’s costing you.
And even if it’s a long term staple on your menu you need to know what it’s costing you right now.
Not what it cost you this time last year, or this time last month. We all know the price of ingredients varies, especially seasonal items. That asparagus tart you had on the menu last month may have been reaping a healthy return of £3.00 a portion when the asparagus was coming from just down the road. But what’s it costing you now that it’s being flown in from Peru?
And what about your costs now that your new chef who has adapted the recipe and substituted some of the ingredients….?
Rule number one of any business… understand your cost of sales.
In other words not just the cost of the raw ingredients but how much the dish is costing in total, including all the accompaniments and extra finishing touches.
Better knowledge on your and your chefs’ part will make you all more aware of controlling those costs.
There’s no need to limit this to the kitchen either. Do your waiting staff understand the cost of brought in products and basic items such as a cup of coffee.
Or if you use any disposables as part of the dish cost include these too.
|Using the recipe costing calculator will enable you to:
Which means that you never have to make a loss on a dish again
2 Spot your star performers so you know what to push and promote and what to ditch altogether….
You know how in the supermarket all the stuff you really need such as milk and bread is tucked away at the back of the store? No, they don’t do it just to annoy you…. It’s because these are the loss leaders. These are the products people need and will buy anyway, but you have to walk past all non-essentials (and higher profit items) to reach them. They are loss leaders they want to tuck away.
You need to adopt a similar approach in your restaurant.
You need to know the items that generate very little profit, and you want to tuck away or downsell, and which ones are your ‘stars of the show’. Your stars are the items you sell at a good margin. Plus they are popular so you are able to sell a lot of them, which of course in turn means they lead to a healthy profit.
We often get carried away with a percentage margin. That’s a good place to start but it’s actually more useful to look at the margin contribution in monetary terms.
You don’t bank margins, you bank cash.
So do some star gazing in your business.
|Once you have your costings, this simple tool will help you:
When applied to your menu this process is termed ‘Menu Engineering‘. But why limit it to your menu? Apply this tool to any of your products or offers to wheedle out your poor performers. This way you can be sure you are focusing your resources and energy on the items that make you the biggest margin and most money in all parts of your restaurant, hotel or cafe.
Which means that you can focus on selling more of the dishes or products that make you the most profit
3 The Reality Check
Is it time to Party or Lockdown?
However much you think you should be making completing a regular simple P&L (Profit and Loss) will give you the reality. It doesn’t have to include every last penny, but you should know at the drop of a hat what your overall profits were for the past week.
Do you know week by week what your cost of sales and overheads are as a percentage of turnover? You simply can’t afford to wait until the end of the month or worse still the end of the year to know how you are doing. You need to be able to react swiftly to any problems.
For example if you have a problem with pilferage how would you know if you aren’t on top of the figures? How long might it take you to pick this up?
Maybe it’s happening right now, and you are blissfully unaware….
| This simple P&L spreadsheet won’t count your stock (sorry!) but it will do is:
Which means that you can be on top of your figures all the time
4 Profit Ready Reckoner
Now we’ve got costs under control, and focusing on high profit items the next area of focus is to increase sales.
In essence there are only three ways to increase sales
- Increase the number of customers
- Increase their average spend per head
- Increase the number of times each customer buys from you
This profit ready reckoner lets you monitor all three in tandem.
We often get lulled into thinking that lowering process will bring in more business. Quite apart from the other long term ramifications of doing this, the least you’ll want to understand is exactly what impact it will have on your bottom line right now.
So if you’re ever tempted by that Groupon deal or to give a discount on certain days, this ready reckoner will give you at a glance how the overall increase in business stacks up against the discounted spend per head – before you commit and live to regret it.
But the good news is things can work in your favour in reverse. What if you were to put up prices on some items? What impact might this have on your bottom line….
This is your ‘what if…’ tool
- What if you increase sph by x percentage?
- What if you could get 1 in 10 people to come back a couple more times per year?
- What if you run that inclusive deal…..?
|With the Profit Ready Reckoner you’ll be able to see at a glance
Which means that you can spot the opportunities easily to grow your profit
And that’s not all.
On top of these 4 key tools I’m also adding in a special bonus…….
5 Event ‘Boost or Bust’ Estimator
But they also have the potential to get you nearly to bust over night. Anyone remember the famous vacuum cleaner giving flights to New York? Big mistake! Now I’m not suggesting you’ll be tempted to offer flights to your customers, but get your sums wrong and you could be in a similar position. Unlike said vacuum cleaner manufacturer you probably don’t have the same infrastructure to allow you to bounce back quite so readily.
So as a bonus I’m giving you the comprehensive Event Estimator so you never lose out on an event again.
Use this for all your functions, events and promotions, whether it’s a one off small scale birthday party, or a VIP red carpet event.
This comprehensive Event Estimator will ensure you don’t get caught out on costly resources that don’t get factored into your costing…. Leaving you with a depressing loss and a lot of hard work for nothing.
The Event Estimator will allow you to do:
Which means that you never have to make a loss on a promotion again
So in summary, here’s what you get:
5 essential tools to help you make more money from your hospitality business
|Recipe Costing Calculator||normally £17|
|Star Spotter Menu Engineering Template||normally £27|
|The Reality Check (P&L)||normally £27|
|Profit Ready Reckoner||normally £27|
|Plus your bonus…………………
Event ‘boost or bust’ Estimator
|Total Value £165|
But you can get all 5 tools in the essential money matters toolkit for just £67
Which means that you’ll have a more profitable business that you are in control of instead of leaving things to chance
All these tools come as downloadable Excel documents, with guidance notes. So you get them delivered to your mailbox ready for you to download, save and use straight away. No hanging around for days or weeks waiting for bulky packages to arrive in the post….
I look forward to seeing you on the other side….!
P.S. The numbers don’t lie. Once you know where you are you can make a plan.
Don’t hide your head in the sand