Running a restaurant is no easy task. Between rising food costs, labor challenges, and unexpected expenses, keeping profit margins healthy can feel like a never-ending battle. But improving your margins doesn’t mean cutting corners or sacrificing quality—it means getting smart with your numbers and operations.
Here’s how successful restaurants are improving their profit margins:
1. Know Your Numbers (Inside & Out)
Understanding your food cost percentage, labor costs, and overhead is non-negotiable. If you don’t know where your money is going, you can’t improve your margins. Regularly track:
- Food Costs: Calculate the cost of each menu item, ensuring you’re pricing correctly.
- Labor Costs: Monitor how much you’re spending on staffing versus sales.
- Overhead Expenses: Rent, utilities, and other fixed costs should be accounted for when setting budgets.
2. Control Food Waste
Food waste is profit wasted. Here’s how to minimize it:
- Track Inventory Closely: Know what’s coming in and going out. Rotate stock and use older ingredients first.
- Portion Correctly: Train staff on proper portion sizes to ensure consistency and reduce waste.
- Get Creative with Leftovers: Create daily specials or staff meals using ingredients that are close to expiration.
3. Menu Engineering
Your menu isn’t just about offering variety—it’s a strategic tool for profit:
- Highlight High-Margin Items: Feature dishes with lower food costs and higher profitability.
- Adjust Pricing as Costs Change: Don’t let rising costs eat into your profits. Regularly review and update prices.
- Remove Low-Performing Items: If a dish isn’t selling or has low profit margins, it might be time to take it off the menu.
4. Labor Management
Labor is one of the largest expenses for any restaurant. Managing it efficiently can significantly improve margins:
- Schedule Based on Data: Use sales trends to schedule staff during peak times and minimize overstaffing during slow periods.
- Cross-Train Employees: Having flexible staff who can perform multiple roles helps cover shifts without overstaffing.
- Monitor Overtime: Keep an eye on overtime hours and manage them carefully to avoid unexpected costs.
5. Regular Financial Reviews
Staying on top of your financials is crucial:
- Review Your Profit & Loss Statement Monthly: This helps identify trends, spot problem areas, and make informed decisions.
- Set Financial Goals: Aim for measurable goals each month, whether it’s reducing waste, increasing average ticket size, or cutting costs.
- Seek Expert Advice: If numbers aren’t your strength, consider hiring a professional bookkeeper to guide you.
How The Food Bookkeeper Can Help
At The Food Bookkeeper, we specialize in helping restaurant owners stay on top of these critical financial details. From tracking expenses to running accurate reports, we ensure your books are clean and your profit margins are as strong as they can be.