There are arguably four key ingredients to a successful restaurant– the right marketing plan, flawless operating systems, memorable customer experiences, and finally, living in the moment.
In the blink of an eye, a moment of opportunity is simply gone. You’re not going to get the past day, past hour, or past minute - back again.
With that in mind, ask yourself this right now– have you taken full advantage of cost control and revenue generation during the past day, past hour, and past minute?
A successful restaurateur understands they must maximize every day, every hour, every seat, every phone call, and every online order. Empty seats and minimal productivity is simply not good for business in this cut-throat industry where costs must be controlled and where revenue must be generated on an evolving basis.
Customer duration, kitchen productivity, average check, and Revenue Per Minute (RPM) or Revenue Per Available Seat Hour (RevPASH,) must be closely monitored by today’s operators and managers.
So, how can a restaurateur maximize profits, improve customer turnover rates, control operating costs, and effectively live in the moment?
Here are some tips everyone can use, starting today!
Tip #1: Do an Operations Audit
Review all day-to-day processes and understand the overall work-flow of the restaurant.
Some good questions to answer:
- What back-of-house systems and front-of-house systems are being utilized?
- How are they affecting productivity, customer service, and customer turnover?
Review each checklist, each training program, each communication method, and each piece of equipment to determine how it is either hurting or improving the restaurant– in both the short term and long term.
Tip #2: Integrate Technology
Without completely replacing person-to-person interaction, how can new restaurant technology improve how a restaurant lives in the moment? New technology can develop better and quicker communication amongst the entire team (for example, table-side POS systems.) It can also enhance and create more profitable take-out & delivery programs (for example, online ordering.) Technology can also improve inventory methods and cooking time methods, which will both reduce waste and help to control hourly operating costs. It may be time to complete a technology audit for your property.
Tip #3: Maximize Space
Table management, floor layouts, take-out counter design, and kitchen space optimization will in fact, play a large role in productivity, customer experiences, and customer turnover per day and per hour. For example, a restaurant's table configuration will greatly affect duration and average revenue per customer, based on the spacing between tables and whether it is a booth configuration or an anchored or non-anchored table setting. Make sure you’re maximizing every square inch to its full capacity based on the concept and average party size without diminishing customer experiences.
Tip #4: Improve Menu Engineering
It’s no secret– the menu is where the money is made. The size of menu also plays a large role in productivity/ work-flow, potential waste levels, time of visit, and customer turnover rates. For example, to fill seats during traditional non-peak hours, restaurateurs need to consider menus that target day-parts– while understanding their ideal customer profile. This takes a full team effort, from the owners, managers, chefs, and front-of-house staff with the assistance of point-of-sale reports, customer feedback, and other market research.
Tip #5: Update your Marketing Plan Regularly
The moment a restaurant stops marketing, is the moment it starts failing. Once a restaurateur truly understands their locations slow periods and peak periods, in addition to target market and guest spending habits, a strategic plan can be developed and executed to maximize each moment of each day. Ensure your restaurant has a monthly and quarterly marketing plan created.
Tip #6: Consistently Monitor Guest Experience
Outside of food, drink, and customer service– music (tempo & style), lighting (brightness), seating and/or counter configuration, and overall interior design also play a large role in contributing to a guest's duration, their amount of spending, and if they will return again. These touch points must be monitored and measured on an ongoing basis, preferably with the help of secret diners.
Tip #7: Restaurant Revenue Management
Taking all of the above strategies and aligning it with an in-house Restaurant Revenue Management program (RRM,) will accurately maximize revenue, time, and capacity while controlling your operating costs.
RRM can be defined as simply selling the right seat (or take-out meal), to the right customer, at the right price, at the right time, and for the right duration of time.
It is possible that a restaurant could run at 75% capacity or more, and still not be profitable. This is why combining what’s called Revenue per Available Seat Hour (RevPASH) or Revenue per Minute (RPM) reports with seat duration, average check, and food costs– plus labor costs reports is extremely important to maximize each and every moment.
As a full service restaurants number of turns increases and meal length decreases for example, the RevPASH increases. For example, a one minute reduction in meal time can increase RevPASH by approximately two percent, a remarkable improvement to ones bottom line.
Once you know the average meal length, you can determine many other factors of the restaurant– such as your full potential for each day of the week. This will also assist in developing accurate break-even points, staff schedules, food preparation, and much more.
The goal at the end of the day is to reduce the average meal length, while continuing to over exceed the customer experience. This will ultimately increase revenue, decrease cost ratio percentages, and maximize one's revenue potential every minute of the day.
Some key takeaway questions to ask yourself now:
- What is the dollar value of each seat and each take-out order; every hour, day, month, and year for your restaurant?
- What is the cost of each operating hour?
- Are you living each moment to its fullest?
- What areas and what times of day can you improve on?
Only you know these answers and can leverage them to make your restaurant more profitable.