10 Ways to Make Your New Restaurant More Profitable
Eveve have worked with over 1,500 full service restaurants in the past 10 years, covering a vast array of cuisines, locations and operations. In general, most of Eveve's clients are full service, and so this blog will be most helpful to such restaurants, but hopefully it can be of value to restaurateurs in the quick service sphere as well. After working with so many restaurants, we analysed the top 10% and what makes them so successful. The blog forms the first in a series of three, looking at the question form three different perspectives. This first blog looks at the perspective of a new build restaurant.
How Do I Make My Restaurant More Profitable?
- The Food. There is no avoiding the importance of food in a restaurant's success. After all it is the reason your guests will leave the house in the first place. Ensure that you have a chef whom you can trust, who can run a team which can prepare food in a timely manner, with consistent quality. Make sure that the menu is not too long, to ensure you have the freshest food. Invest in quality ingredients, it is the only way to ensure a superior product is being provided to your guests. The execution of the food served is not Eveve's speciality, but we know that food is the first and most basic issue. If this is not addressed, there is little point in going on to the next points.
- Location and Demographics. Invest in a good realtor who is an expert on locations and demographics in your city. What kind of demographic are you looking to attract? Where does that demographic live in your city? What do they like to eat? If you are looking to serve urban professional hipsters, find out where a Whole Foods has opened recently, (why not piggy back on Wholefoods' first rate demographic modelling). If you are looking to open a New York style Steakhouse serving wealthy baby boomers, find out which part of the city buys the most Cadillacs. A top class realtor must have an authoritative grasp of these facts. Eveve can recommend first class realtors in Houston, Austin, Minneapolis, Cleveland and Denver. Call us for details.
- Parking. When sourcing a location, adequate parking should be one of the first items on your list. Unless your restaurant has access to first class public transport (and even if it does), your patrons will travel by car. If they can not find parking, they may stay away. Ensure your property has adequate parking, and if possible try and set up agreements with local businesses which have parking, but operate on daytime hours (such as Banks or hairdressers).
- Website. Over the years Eveve have worked with dozens of restaurants which have committed over a million dollars in renovating their property, but have opened without a website being live. The fact that this still happens in 2015 is remarkable. In the grand scheme of things, a website is relatively inexpensive, with a high quality one available for between $1,000 and $3,000. The revenue driven by the website will be tens of times the outlay and is crucial to your profitability, so do not scrimp on the cost with a part-time nephew or friend, who might not have you live at least a month before opening. Choose a professional, and better still one which specialises in restaurants. Eveve offers subsidised websites for new TELOS reservation system clients.
- Great Concept. A disproportionate number of the most successful new restaurants are profitable because they give the dining public what they want, in many cases before the public know they want it. Some restaurateurs are just great at predicting new trends, but one thing we can state after 10 years in the business, is to repeat that old adage "there is nothing new under the Sun". Even the most exciting American chefs borrow from the Spanish, French and Italian masters. If you are stuck for some inspiration, why not spend a week in New York, San Sebastian or London, three of the most avante garde food cities. See what is really clicking there, and the chances are, in a year or two it will be popular in your city too. For gastronomic tours of Spain (home to 5 of the World's top 20 restaurants, 2015), we recommend CASTILE TRAVEL www.castiletravel.com
- Overestimate your Capital Requirements. From experience we have seen dozens of restaurants spending over a million on renovation, only to shutter within six months. Why? In nearly every case, the restaurant assumed it would break even as soon as it opened; or the build costs were higher than expected, and the reserve fund for the first six months was used up for the build. Either way, the bottom line is that it is common for restaurants to underestimate costs and actually go bust before they have really hit the ground running at six months. Make sure you have enough capital in place for the build, start-up costs, a loss for six months, and some extra for unexpected events.
- Ensure Sufficient Two-Top Tables. The cardinal sin of most architects is completely ignoring economic reality when designing floor layouts. The fact is, the most common party size in fine dining restaurants is two, followed by four tops. Even more important, two-tops tend to have a higher spend per head, and a shorter turn time, which means they earn far more per hour. It is incredibly common for restaurants to have banks of large tables and booths, and a relatively small number of two-tops, often situated in the least hospitable parts of the restaurants. The result is that most restaurants end up sitting two-tops on six person tables, even at times when they are full (running a waitlist), which is a huge waste of resources. To ensure the profitability of your new venture, remember that you will probably get more two-tops than any other party size, they will spend more per head, and be in and out relatively quickly, so ensure plenty of two-tops, and that some of these are in nice locations, like beside the window. Finally, it is easy to combine several two-tops in to a larger table, but you can not split a larger fixture like a booth between two or three parties.
- Accept Reservations. If your restaurant is full service, reservations are a must. Not only are they requisite for the guest experience, but they are highly effective for the operator as well. Walk-ins tend to come in large lumps, around 7pm for example, or Sunday Brunch at 10am. A well planned reservation system is far more effective at smoothing the loading of diners over the whole shift versus walk-ins, which improves food and service, consistency, the guest experience and your profit. For more information of how to run your reservations to maximise profit, please see the third blog in our series Blog 3 hyperlink
- Invest in a Lead Host. In Europe and New York it is not uncommon for the best paid member of staff to be the Maitre'd. And why not? It is the most intellectually vigorous position in the restaurant when done correctly. Yet in many American restaurants, the host team are the least well paid members of staff. It is crucial to have one person beside the door who knows what they are doing. Invest in a well-paid, experienced lead host or reservations manager, who understands the importance of maximising reservations and walk-ins, and is incentivised to manage the floor in a profitable way for your business. In many of the most successful restaurants, the GM or restaurateur takes on this role themselves, at the weekend.
- If you are New to the Business, Open With a Restaurant Consultant. Restaurants have an incredibly high failure rate, and if you have never owned a restaurant before, the learning curve is painfully steep. Working with an industry veteran can smooth the curve, and reduce the amount of your savings/investment which is burned approaching break-even. Be wary of "consultants" however, as many are failed restaurateurs, who failed for a reason. Always check references, plus their successes and failures. If you are not sure where to find a consultant in your city, why not call the five restaurants you most admire locally, and ask them to recommend someone. Most will be happy to help, and cross referencing their recommendations is useful. Eveve offers specialised short term reservations and technology consultancy, which has a proven Return of Investment and has been deployed by some of America's highest revenue restaurants. In the specialised sphere of restaurant reservations consultancy, Eveve's advice and 10 years of experience is peerless. Eveve is not a full service consultancy, however, and can recommend a number of consultants for general consultancy outside the reservations sphere.
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