The 6 Best Methods for Restaurant Revenue Management
By: Liam Cannon
Nov 16, 2017
Should you try to increase your sales, or should you focus on decreasing your costs? This is the age-old question when it comes to restaurant revenue management.
There is no doubt which one is more glamorous than the other - increasing sales! Being that owner/manager that can increase restaurant sales by 5–10% will, without a doubt, receive huge plaudits.
Sure, increased restaurant sales are super, but they may come with an increase in labor and operational costs while also resulting in a decrease in customer satisfaction. After all, increased productivity does not always equate to increased customer satisfaction.
This, in the long term, can be detrimental to your restaurant.
Restaurant Revenue Management 101
Increasing sales and reducing costs aren’t all that different. There is one major factor that they both need in order to work, and that is accurate data. Without this, your restaurant will be unable to pinpoint and act on the factors that affect your business’s revenue management.
We've put together a list of three points for both reducing restaurant costs & increasing restaurant sales that should be implemented in your restaurant immediately.
Increasing Restaurant Sales
1. Add an Integrated CRM System
A Customer Management System (CRM) is an approach to managing a company’s interaction with current and future customers. This system isn’t just for big sales teams - it is for restaurants too.
A CRM that is connected to a restaurant’s POS system can arm restaurants with valuable customer data. With this, restaurants have a database of customers with specific ordering preferences and contact information at hand. Knowing your customer base inside and out helps with loyalty, upselling, and customer happiness.
This is something most restaurants dread. Having to think up of new recipes, researching what items worked well last year, and changing all the menus can be a costly and time-consuming process. Saying this, menu rotation and testing is a must to keep your restaurant fresh and in season all year round.
Using analytics from your POS system will mean you can make more informed decisions when it comes to menu engineering and rotation. This accurate data means there is less guesswork when it comes to deciding on seasonal dishes. You can look at what items worked well last season and see if prices can be increased on these dishes.
If you struggle with creating new menu’s why not check out this free menu engineering bootcamp that can help you increase your sales by 27%.
3. Start Using Mobile Service Tablets
Do your servers spend their days running to and from the kitchen with their order pads? Do you chefs get frustrated with hard-to-read order slips and mixed-up specifications that customers have? By implementing mobile service tablets, these headaches become a thing of the past. The ordering process is streamlined and immediate, which can improve your order output by 15% or more.
All this data is easily captured via the mobile service tablets and is plugged straight back into your POS's built-in CRM. This way, all the information is accurate is easily accessed.
Decreasing Restaurant Costs
1. Focus on Effective Scheduling
It takes an average of three hours to create restaurant employee schedules. With managers being among the highest paid employees within a restaurant, the task of employee scheduling accounts for a huge chunk of a restaurant’s labor costs.
Typically restaurant managers use multiple spreadsheets and excel to schedule their employees. Excel is for numbers, not for people.
Managers have to regularly adjust these schedules when requests for time off and shift changes come in. This takes huge amounts of time, not to mention distributing the manager's already busy schedule.
This is where an online scheduling platform comes in. These types of platforms can save your managers multiple hours each week. Also, you can check out these 7 tips you can reduce costs through effective scheduling.
2. Start Inventory Tracking
This is an area where restaurants have a major problem. It isn’t the most popular task when it comes to restaurants. In fact - most restaurateurs find it to be arduous, time-consuming, and frustrating. Make no mistake, when inventory tracking is done wrong, that's exactly what it will be.
74% of employers experience payroll losses related to buddy punching.
Buddy punching losses average 2.2% of gross payroll, and that’s just one form of time theft.
The average weekly “theft” of time long lunches and breaks, tardiness, early departures, etc.) is four hours and five minutes per employee per pay period.
Inputting time cards manually can cost 1% to 8% of your annual gross payroll due to human error. This can come from keying in numbers incorrectly, transposing numbers, or misreading handwritten records.
Simple apps can be used to capture employee clock in, out, and break times. This along with image capture of employees, when they clock in, will save your restaurant thousands of dollars each year.
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