Unlocking Restaurant Profit
In the world of restaurants, making money is a big challenge. Owners and managers have to understand a lot about money to make sure their restaurant not only survives but also does really well. In this article, we will talk about the important things that help a restaurant make a profit and how to do it.
Important Things that Affect Profit
Food and Labor Costs: Two important things for restaurants are food and labor. Ideally, the cost of food should be about 27% of the money the restaurant makes, and labor costs should be around 30%. These numbers can change a bit based on the type of restaurant and where it is located but are a great starting point for most restaurants.
Reducing Waste: Throwing away things in the restaurant, like food or supplies, can hurt profits a lot. It's important to stop waste by not ordering too much food, using the right amount of ingredients, and not wasting anything. Saving money is all about reducing waste.
Using Data: Many restaurant owners forget to keep important information like how much money is spent, how much is made, and what customers think. To make good decisions, you need this information.
Ways to Make More Money
Splitting Up Jobs: Sometimes, when more than one person owns a restaurant, they might end up doing the same job or nobody does the job. It's better to sit down, decide who does what, and check in with each other. This way, everyone knows their role and work gets done faster.
Keep Good Records: Keeping records means writing down important information. It helps find where you are wasting money. For example, when creating a ramen dish for a previous business, my partner and I noticed that we were spending way too much on shiitake mushrooms. After some testing we realized that depending on the size of the shiitake mushroom, we would lose as much as 80% of the weight of the mushroom after roasting it. While this made a delicious element to the dish, the yield was way off what our target was. Tracking our costs caught our error and we corrected it before it was too late. Although we did spend a ridiculous amount of money on mushrooms during that time.
Financial Outlook: To make a restaurant more profitable, you need to look at the money closely. It's like looking at a map to find the treasure. When you do, you can see what's not going right and what you should fix.
In the end, making money in a restaurant means having the right food and labor costs, preventing waste, and tracking the right data. Success comes from smart decisions and a willingness to make changes.
In our next article, "Budgeting for Success: Financial Planning", we'll talk more about planning money and how it can help restaurants do even better.
