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5 Ways to Improve Your Restaurant's Bottom Line

Posted by Donald Burns on 8/6/15 9:00 AM in Restaurant Management, Restaurant Marketing, Restaurant Metrics, Menu Management

6 minute read Print

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Toast is pleased to present a guest blog from Donald BurnsThe Restaurant Coach, a sought-out advisor in the areas of menu design & engineering, restaurant operations, social media marketing, and more.

There are a multitude of sins, standards, and general sound business practices that many restaurant owners overlook or ignore. When it comes to the restaurant industry, there are probably 1000 or more ways to lose money. The old saying, “the devil is in the details,” is so very true for restaurauteurs that want to build their bottom line.

Having a healthy P&L is not just a lofty ambition. It's actually a requirement if you want to make it in today's economy. Tough markets are a perfect example of Darwin's grand idea of evolution by natural selection. The smart and strong evolve and adapt. Those that resist change and refuse to maximize profitability become extinct. 

To save you the fate of the dodo bird, here are five ways you can improve your profitability.

1. Give your menu a checkup.

Let's be real: the 80's was another lifetime ago. The days of excess are gone, along with clip art and seven panel menus. Today's customers are savvier than ever. When they see a large menu, they know the quality of food served is going to be questionable. A smaller menu means higher quality, faster service, and higher profits. Menu engineering is a smart move to get rid of the dogs on your menu (those items that are low profit and low popularity).

A fresh menu design is like a new coat of paint on a car! You can get your customers, staff, and maybe even yourself fired up about your restaurant again. You can peruse analytics reports from your POS system to get a better comprehension of what your customers are really buying. And here's a clever marketing tip: When you find out what your customers want… Give them more of that! Common sense, right? As we all know, common sense in the restaurant industry is sometimes not so common.

 2. Know your costs.

Not knowing your costs has to be one of the top three of common restaurant sins committed in the restaurant industry. The only excuse for not knowing your costs would be if you are secretly a billionaire, who wears a mask, fights crime at night, does not need to make a profit, and has a very good accountant who was once an associate of organized crime. That's it. That's the only excuse for not knowing your numbers. Let's not forget that the purpose of the business is to make a profit.

Technology definitely has followed Moore's law, which states that computer processor speeds, or over all processing power, will double every two years. It's apparent when you just look at restaurant POS systems. Ten years ago, there were only a few major companies that created the equipment and the software that could be used as a restaurant point of sale system. With the introduction of the tablet and the cloud, the face of the POS industry has changed dramatically.

There are Internet-based tablet POS systems that allow you to not only monitor sales, but also access restaurant CRM data, run labor reports, or analyze your menu mix and food cost off-site and on the go. These new systems make old excuses obsolete when it comes to knowing your cost. 

Restaurant Budget Variance Template

3. Focus on training.

Restaurants really need to step up their game when it comes to training and coaching their team. They put in all the time and effort to recruit new talent for the restaurant, but once these new employees are in the door, the majority of training programs are nothing more than a workbook and two or three days of shadowing another team member.

Restaurants get better when their staff gets better. People only get better when training is a focus. Think of it like going to the gym. You would not go one time and say, “That's it. I worked out, so now I'm in shape.” Ridiculous right? Well, so is not training your team on a consistent basis.

So you might ask the question, “How does investing in restaurant training improve my bottom line?” Better trained teams make fewer mistakes, consistently deliver better customer service, and reduce turnover. Those three are definitely profit builders.

4. Get social on social media.

Of all of the ways to improve your restaurant's bottom line, nothing is as close to Darwin's evolution of natural selection than social media marketing. Many restaurant owners are in denial of the benefits of social media. They're like an ostrich with their head in the sand, just hoping it will go away. It won't. Restaurants need to embrace social media marketing. 

If you look at just the pure facts and statistics alone, you'll see that social media drive traffic to products and brands. Today, you need to be on what is known as The Four Horsemen of Social Media: Facebook, Twitter, Pinterest and Instagram.

Most restaurants only have a Facebook page. It’s about the same as having an antenna for your TV and no cable. When talking to restaurant owners about other social media networks, most give the excuse that they don’t need it. Later, the truth comes out that they don’t know how to use the others. Please don’t use ignorance and denial as an excuse to avoid interacting with your customer base.

So, do you want to know the big secret about social media?

It’s simple. It’s all about being social.

So what does that mean? Stop just posting all about your daily special or beer features. There are hundreds of other restaurants doing just that, standing on their soapbox and screaming about their specials and features. Don’t compete. Stand out.

How do you stand out on social media?

1. Interact with your customers. When they post comments, say thank you.

2. Posting pictures of your food is great. But don’t make that the only thing you post. People love to see pictures of your guests having a great time in your restaurant. How about some cool black-and-white action photos of your kitchen team during the dinner rush?

Being social on social media might not have the immediate results you many want. However, being social on social media is a long-term investment in creating brand equity, and that will add to your restaurant's bottom line.

5. Get rid of poor performers.

There is a joke that goes, “If you want to lower your turnover by 10-15%, just hire bad people, because they never leave!” It's sad, but true.

Your number one job as an owner is to guard the doors of who you allow to take care of your guests. Restaurant competition is fierce. It's brutal. Every time someone walks through your door, they have chosen NOT to spend their money somewhere else. It's your responsibility to hire and train a team that lives and extends your passion to your restaurant's food and service.

Bad attitudes and substandard skills are rampant in this industry. You have to be slow to hire and quick to fire. For the first few weeks, new hires are usually on their best behavior. Then, they start to get comfortable, and their little quirks start come out. Right then is the time you need to decide if those little quirks are going to help or hurt your brand. Remember, every decision you make is to protect and perpetuate your brand identity in the market.

Most of the time, restaurants hire for skill. What they need to really hire for is positive attitude and adaptability. Poor performers are just that: poor. They are an anchor on your team that pulls the rest of your service down. Your superstars have to work twice as hard when teamed up with a poor performer. And the thing is, the superstars won’t say anything. They will just work twice as hard and burn out that much faster.

Do you have some staff that are just poor performers? You must have at least one or two… Come on, be honest. If you do, then you need to let them go.

Now, letting people go is not an easy task for most restaurants owners. However, poor performers tend to make more mistakes (which costs you money), and they also do not provide very good customer service (which also costs you money). Getting rid of them will not only improve your bottom line, it will improve team morale. As an old saying goes, “Happy employees make happy customers.”

And happy customers are always good for the bottom line.

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toast restaurant management blog

Written by: Donald Burns

Donald Burns, The Restaurant Coach™ is the leading authority, author and international coach on how restaurant owners, operators and culinary professionals go from just good to becoming exceptional. He helps independent operators create organizations that thrive and bring out their workers' natural strengths to reach their peak potential. A sought-after advisor in the areas of menu design & engineering, restaurant operations, rebranding, social media marketing, culinary consulting, team development, behavioral dynamics, productivity & peak performance.


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