The Ultimate Guide to Increasing Restaurant Revenue

By Brett Doyle October 11, 2021 Categories: ,

Struggling to increase profits with your restaurant? Here's how how to boost your restaurant’s revenue by focusing on traffic, sales, and services.

 

How to Optimize Revenue and Maximize Profits for Your Restaurant

Running a restaurant is no easy feat. From attracting customers to training staff, and making a scrumptious food and drink menu. You have—literally—a lot on your plate. 

Competing with an overwhelming number of restaurants and keeping up with rapidly changing trends only adds to the challenge. As a business owner, you already know that revenue management is vital to your restaurant’s success. But when you encounter cash flow problems, do you know how to resolve them?

The restaurant industry has been heavily affected by the COVID-19 pandemic because of the prolonged implementation of lockdowns. As a result, you’re constantly worrying about maintaining your bottom line, while also cutting costs and managing margins to stay profitable. 

According to data from Defend Jobs Philippines, 80% of small food service businesses in Metro Manila and the provinces of Bulacan, Cavite, Laguna, and Rizal were heavily hit by the government restrictions on dine-in services this past year. Since then, only 20% of restaurants have fully recovered financially from this setback, and many are still looking for ways to improve profitability amidst the lockdown.

If you're looking to find ways to boost your bottom line this article will guide you with plenty of tips to get started. Use it to increase your restaurant’s revenue by focusing on traffic, sales, and service. 

 

Restaurant Revenue

The restaurant industry already has low margins compared to other industries, and that means you need to do everything you can to improve your revenue. 

How? Well, there are three key areas which impact your revenue the most:

  • Number of tables and seats 
  • Seasonality
  • Operating hours 

So focusing on these factors is a good place to start when you’re trying to increase your restaurant’s revenue.

But before creating strategies to increase your revenue, you should first understand your current revenue streams to see where you stand. This allows you to make data-driven decisions to improve your services or expand your business. 

 

How do you calculate your restaurant revenue? 

Here are the steps to help you calculate your average daily, weekly, monthly, and yearly revenue: 

  • Select a specific day you want to measure. It can be any day, but it’s best to choose a period when service is the busiest.
  • Count the number of customers you serve in one day. It should be easy to get this data if you have a good POS system. Apart from counting the number of tables, you also have to know how many guests are present at each table and your overall restaurant capacity.
  • Sum up all receipts and get the total sales for the selected period. Again, it is easier and faster to get accurate data with the right POS system, but you can do this by hand as well.
  • Divide the total sales by the number of guests served in a day to get your average guest check. For example, on Wednesday, if the total sales for your dinner service were ₱20,000 and you served 50 customers throughout the dinner shift you would write the formula like this: 

20,000 / 50 = 400

So, your average guest check on Wednesday’s dinner service is ₱400 per customer. 

  • Track your data. To follow, you will need to track the above numbers for a week. After a week of consistent tracking, you should have enough information to see whether these figures remain stable over time.
  • Calculate daily average revenue. You can do this with the following formula: 

Guests Served x Daily Average Guest Check = Daily Average Revenue 

For example, if your restaurant finds that:

Number of guests served: 25

Average guest check: ₱400

25 x ₱400 = ₱10,000 

Your daily average revenue is ₱10,000. 

To get your weekly revenue, multiply your daily average revenue to 7 days. Then multiply your weekly revenue by 52 to get the average yearly revenue, then divide it by 12 for average monthly revenue. 

₱10,000 x 7 = ₱70,000 weekly revenue.

₱70,000 x 52 = ₱3,640,000 yearly revenue.

₱3,640,000 / 12 = ₱303,333.33 monthly revenue. 

After calculating your restaurant revenue, you’ll now have a better idea on how to adjust your restaurant goals. For example, if your costs are higher than your revenue, it’s time to look for new tools to integrate within your operations to increase your profit margins even more. 

Let’s talk about exactly how restaurant owners can do this. There are three things that we’ve mentioned earlier that will help boost your revenue: 

  • Traffic: The number of customers that you serve per day
  • Sales: Your restaurant’s revenue
  • Service: How your customers are treated while dining in or ordering from your restaurant

 

How to Increase Restaurant Traffic 

First, we’ll focus on traffic, or the number of people you serve per shift. Many restaurant owners have seen a sudden change, where customers are switching from dining in to ordering takeaway because of Covid-19 lockdowns.

Attracting customers to buy from your restaurant is already challenging. Now, with competition both online and offline, it’s crucial to stand out among the rest for customers to pay attention to what you offer.

Here are three tips to attract more customers to your restaurant to increase traffic:

 

1. Offer Promos

Promotions can be a great way to get people through the door on days that would otherwise be quiet. However, promotions need to be well thought-out to build excitement and to be profitable.

Here are some ways to offer successful restaurant promotions. 

  • Take advantage of holidays or events. Providing special offers during holidays, such as Valentine’s Day, can generate high profit, because people like to celebrate at restaurants. 
  • Loyalty Programs. Give special offers to your customers by giving them loyalty cards. This will encourage them to keep coming back to your restaurant for repeat business. 
  • Offer special discounts to people who share their experiences on social media. This is a great marketing strategy that encourages more people to visit your website or check out your restaurant offers. Maximize the power of social media by asking your diners to share their experiences online in exchange for discounts.

The more strategic your promotional offers are—the more customers will use them. Having accurate and timely data can help you decide on what promos to offer your customers. 

 

2. Build a Social Media Following 

One of the best ways to build a relationship with your customers is through social media. Having an online presence is crucial, but it’s hard to spread the word about your restaurant without a large social media following. 

One way to attract customers is by posting creative social media content, such as mouth-watering photos of your dishes or a short video showing some of the steps to make a dish. After all, Buzzfeed popular Tasty recipe videos have over 40 million followers on Instagram. 

Having shareable content is a great marketing strategy to entice customers to visit your social media account. As your followers grow, your foot traffic also increases, which leads to more customers.  

 

3. Keep in Touch with Your Customers 

A restaurant has many chances to engage with a customer, whether it’s through targeted campaigns or social media interactions. Constant interaction with your customers helps you ensure that you are always top of mind when they’re looking for somewhere to eat. 

Data about your customers’ behaviors can help you understand when to stay in touch and how often. For example, promotions, offers, messages, and events encourage people to return or refer your restaurant to their friends.

These are just a few easy-to-implement and affordable ideas on how to increase the number of guests you are serving and ensure repeat business. 

 

How to Generate More Sales for Your Restaurant

Restaurant sales is another factor you have to prioritiz​​e, especially when you are experiencing revenue problems. Having a high average guest check leads to higher revenue, so increasing your sales is one of the best ways to increase your restaurant’s revenue. So, how can you do this? Well, here are 3 suggestions for you to start with: 

 

1. Optimize Your Menu

In every corner of the restaurant industry, from fast food to fine dining, owners are downsizing menus. Whether you want to call it menu simplification or streamlining, it’s a good idea because you’re making your business more efficient and profitable. Also, optimizing your menu means that you can maximize your inventory. 

In a survey by Rewards Network, 28% of restaurateurs said that downsizing their menu led to a more efficient kitchen. Optimizing your menu includes cutting less-profitable menu items and highlighting your highest margin items in your menu. 

 

2. Diversify Your Services 

Currently, with restrictions on restaurants and dine-in services, it is crucial to diversify your services to cater to customers who choose to eat at the comfort of their homes. 

Diversify your services by including the following: 

  • Takeout and delivery menu. Create a separate takeout and delivery menu with items that are easy to prepare and transportable. A special and limited menu prevents overwhelming customers with a lot of menu items. 
  • Provide curbside pickup. For customers in a hurry, offering a curbside pickup will help them consider ordering from your restaurant due to a quicker takeout service. Be more efficient in curbside pickups by using a POS system that can handle online ordering and online payments.
  • Delivery services. Providing a platform for customers who want to enjoy their meals without having to leave their homes or offices can also help increase your cash flow. 

 

3. Train Your Staff

Your servers are a great marketing tool to generate more sales since they are the ones who directly interact with the customers. Having a skilled server who is well-versed on your menu and can communicate with your customers can increase your sales with a simple conversation. 

Here are three upselling tips that you can train your staff to do to boost sales: 

  • Recommend and describe specific items. Recommending menu items with vivid and tasty descriptions will encourage customers to buy and try them. 
  • Suggest food and drink pairings. Your staff should be able to suggest a food and drink pairing that works well together. Giving suggestions is an easy way for your restaurant to add interest and increase check averages, leading to improved profits.
  • Avoid bombarding them with suggestions. Train your staff on when to suggest menu items to customers and when to limit their recommendations to avoid upset customers. It will be hard to encourage customers to buy more when they are already uncomfortable.

Implementing these strategies are both beneficial to your customers and your restaurant can significantly improve your sales. Knowing how to cater to customers’ needs and current restaurant trends will encourage them to buy more from your restaurant. 

 

Provide Great Customer Service

Lastly, the service you are providing to your customers will determine whether they’ll come back to your restaurant or refer your restaurant to their friends and family. An excellent customer experience is the foundation of any strong and successful restaurant. It sets you apart from your competitors, driving loyalty and dedication to your business.

And of course, there’s research to back up this claim. Data shows that 51% of customers no longer come back to a restaurant even with only one negative experience. That means your first impression might also be your last impression. 

So, here are three ways to improve your customer service: 

  • Use integrated payments. With integrated payments, the systems and platforms that facilitate your restaurant's payment process are connected. This means data can flow seamlessly from one platform to another for you to have a seamless experience when accepting card transactions at your POS system during business hours. 

With this, you can simplify payment processes and reduce the waiting time. According to Hubspot, 95% of restaurateurs agree that integrating technology into business operations improves business efficiency. 

  • Do table touches. To improve restaurant customer service, managers should visit tables to ask guests how their experience has been. This method is called “table touches.” 
  • Respond to concerns. There’s not one restaurant that is exempted from customer complaints. No matter the issue, restaurant owners should make it a point to clarify and resolve the issue. After that, talk to your staff and learn from the incident to provide better customer service in the future. 

Prioritizing your customers’ experience by providing great customer service is important in increasing your cash flow. As more customers are happy with your service, you’re more likely to see them come back and to recommend your restaurant to everyone.

 

Conclusion

Improving your restaurant profits during the pandemic is challenging, but using our above tips you can have more power to create data-driven decisions. Access to real-time data analytics helps you improve and eventually expand your services to cater to more customers.

With Mosaic, you will have access to all data on your restaurant, including customers’ spending habits and your most profitable menu item—all in one platform. Our integrated platform provides you with a better understanding of sales volume, margin interpretations, and campaign performance. Basically, you can see what's working and what’s not. 

Use Mosaic to address any issues instantly and bring your business to the next level. 

Ready to increase your restaurant revenue? Or integrate technology into your business operations for seamless transactions? Get in touch with us today, and we will help you boost your restaurant’s revenue.