Every restaurateur I know wants to either make 20% profit at the unit level or, if they don’t, they want to know why their restaurants don’t make profit at that level.
They have heard the overworked saying that restaurants operate on “razor-thin margins.”
Of course, that saying refers to the industry as a whole, so it includes successful restaurants as well as average and unsuccessful restaurants – the good, the bad, and the ugly.
Combined, all restaurants average 3-5% profit.
Show me one person who started a restaurant brand because they had a dream of being average!
My business is about making successful people more successful. You must have success first before you work with me.
So I have clients with restaurants that make 20% or even 25%. And many have profit in the teens, which gives them a viable business model where they invest, create a return on that investment, prosper, and grow.
When we work together to improve restaurants, we identify areas where we can start off by finding a 2% profit increase. At 20%, that represents a 10% profit increase. Add 2% profit in the teens? Even greater percentage increase!
Like my longtime client Ed Murph of Norma’s Café says: “Every percentage point we gain as a result of working with you represents a large increase to us.”
10 Places to Find 2%
- Guest Experience: We live in a world of experiential value. Healthy brands live up to or beat guest expectations today.
- Update: Tired menus, logos, and décor must be brought into the present to get ready for the future.
- Information: Create a clear understanding of financial wins and losses so people know what action to take.
- Cost Management: 2% comes from finding a quarter of a point eight times. That requires detailed (but valuable) work.
- Culture: Clarify what your brand stands for and what people want to connect to.
- Employee Retention: Employees stick around longer and create better experiences for guests (see #1).
- Senior Management : Increase the capability of senior management to improve restaurants.
- Aggressive Goals and Accountability: People learn to show up with results on time.
- Branding and Marketing: Improve the messaging that bonds people to brands and enrolls non-users.
- Competitive Knowledge: You can’t beat the competition without knowing more about them than they know about you.
Don’t Be a Martyr
“Razor-thin margins” can be used as an excuse, just like, “It’s a tough business” or, “We live in an election year.”
Say those enough times over and over and you’ll start to see a victim in the mirror.
Successful restaurateurs like the ones I work with have incredible opportunities, even in a flat market, to increase results and increase profit.
You must have what my clients have: a plan on how you do that now.
