How Much Restaurant Profit Is Enough?

 

“Why isn’t my restaurant making 20 percent?”

I hear this plaintive cry from many frustrated restaurateurs who have heard about that number and – since they’ve heard about it – think they must be entitled to it.

Some of my clients’ own restaurants make over 20 percent, or even 25 percent or more.

They achieve this more through fantastic revenue generation rather than good, old-fashioned cost management.

I remember one client who asked me if his 21 percent profit ought to be considered any good.  

He already had a winning Powerball ticket but was worrying about whether Mega Millions paid out more.


Always Room for More Profit


Most of my clients’ restaurants have profit in the teens, an achievement worth noting.

At that level, they’re already among the most successful in the industry.

But all these dedicated, experienced owners of restaurants with profit of 13, 18, 23, or even 30 percent want to talk about profit – how to make it, build it, sustain it.

You think you have profit as high as it gets. You are wrong.

The average profit increase of every restaurant I have worked with in three decades of consulting? It’s 2 percent.

Huge.  


What Owners Get Wrong About Profit

  1. Compares to industry averages. I have never met a single owner of a successful independent restaurant company who comes to me in hopes of owning average restaurants. Averages combine the winners and the losers. I’m interested in winners only.  
  2. Compares to their friend’s restaurant down the street. Each concept has specific characteristics that dictate profit target. Maximize profit for your concept. Make sure that profit comfortably justifies the investment you make to open a new unit.
  3. Convince themselves nothing big can be done. Cost management discipline focuses on a detailed and precise history of achievement. Big opportunities, evident to fresh eyes – like accessing a new guest type, meal period, menu focus, or PPA initiative – will do a lot.  
  4. Don’t understand that a big increase comes from a lot of small places. The way to increase your bottom line 2 percent may involve knocking out a quarter point eight times. Watch the video below to learn more about that.

Boring Leads to Profits: The 2% You May Be Missing On Your Bottom Line

I have never seen a situation where profit could not go up. Ever.

Over to you. Which of these perspectives will you focus on to increase your profits?