9 Ways to Boost Restaurant Profit Margins

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While average profit margins for U.S. restaurants do tend to be low, there are ways to increase them. To boost your restaurant’s profit margins, you’ll need to increase your revenue, lower costs, or both.

Increase Revenue

There are a number of tactics restaurants can employ to help increase revenue.

Have a restaurant website.

A good website should include your menu and basic information like location, phone number, and operating hours. Studies have shown that the majority of guests check online menus before visiting a new restaurant, and that they’re more likely to choose a restaurant with a good web presence over one without. Keeping key information up-to-date helps hungry patrons/guests find you online, leading to more potential revenue. 

Offer online ordering.

Restaurant online ordering was already steadily rising in popularity, but the COVID-19 pandemic caused that trajectory to soar. A recent study showed that digital ordering is currently growing 300% faster than dine-in traffic. Adding online ordering for your restaurant is a great way to boost revenue since it isn’t limited by how many guests you can fit on your floor.

Market your restaurant.

Driving revenue means driving sales—one way to do that is through effective marketing.  There is no shortage of ways for restaurants to  spread the word about menus and offerings. Social media, paid search, a restaurant newsletter, and traditional advertising are all ways restaurant marketing can help increase those necessary sales. 

Encourage repeat visits.
Building lasting guest relationships is a key part of driving revenue. Consider offering discounts and/or a loyalty program to reward guests and drive them back again and again.  

Train staff to sell. When it comes to increasing sales, your staff may be an underutilized secret weapon. Dedicate some time to teaching them how to upsell guests on specials, recommendations, and additional menus to  quickly and easily increase check sizes.

Decrease Costs

Alternatively, you can increase your restaurant’s profit margin by lowering costs. Here are some ways to do it.

Reduce your COGS.
There are many potential ways to reduce the cost of goods sold: shop around to different vendors to get a better deal, buy ingredients in bulk, or focus on menu items that are cheaper to make.

Reduce labor costs.

Reducing labor costs can be tricky. After all, any restaurant knows that its staff is its best asset. But smart staffing is becoming more popular and common in the restaurant industry. This means looking for trends in traffic to your restaurant, and staffing according to how many people you need on shift for both busy and slow periods.

Reduce employee turnover.

And finally, another way to reduce labor costs in your restaurant is by reducing staff turnover. The Center for Hospitality Research at Cornell estimates that from recruiting to orientation and training to lost productivity, it costs the average restaurant $4,266 to replace a single staff member. Offer employees a competitive wage, benefits if you can, and make your restaurant a great place to work so they’re encouraged to stay.

Invest in Technology—even when profits are down.

One seemingly counterintuitive way to boost your restaurant profit margins is by investing in technology—even when profits are down. 

The right restaurant technology tools can both increase revenue and reduce costs. Consider a platform like Popmenu as an example.

As an all-in-one digital toolkit for restaurants, Popmenu can help boost revenue through:

  • A website that attracts more guests 

  • An interactive menu that drives transactions 

  • Direct online ordering that saves on third-party ordering commissions 

  • Automated marketing tools that drive more people back again and again

Popmenu also boosts revenue by reducing cost; all those revenue driving tools are included in the platform for one, low monthly fee that never goes up.  

Investing in technology tools that streamline and simplify adds up to overall revenue generation;  Popmenu makes it simple and affordable to access all the modern tools restaurants need to succeed in a digital world. Visit get.popmenu.com for more information.