If the food service concept is sound and the location is conducive to that concept, the rest is purely mathematical and somewhat scientific. You’ll need to be able to create an honest business model before you decide to move forward with your food service establishment.
Most restaurants fail before the day they first open their doors for business. First, build an actual business model based on rent, infrastructure, architectural and legal costs, furnishings, advertising, taxes, food and liquor fees, labour and other associated charges. Then, based on a hypothetical worst-case scenario sales projection, can you still profit?
Some of the best Chefs and restaurateurs globally have yet to be as successful as their competitors because their business models need to be more accurate. You can do your homework or use the services of a qualified consultant. Nevertheless, there are significant profits to be made in this industry.
Restaurateurs face rising rents, increasing food costs and customer competition, so upselling has become necessary for maintaining profits.
Ideas for increasing sales include writing more compelling menu descriptions, using menu engineering techniques and providing detailed reports of ingredients and their sources. In addition, training staff in upselling techniques generates powerful results because servers are restaurants’ best sales tools.
Alternative Income Streams
Restaurants can choose from an ever-expanding list of ideas for generating extra revenue. The options range from adding service hours for early mornings or late at night to renting out space when the restaurant’s not in use. Restaurants with limited hours can rent their space during downtime for meetings, parties or kitchen use by local caterers, food trucks or food-packaging businesses. Other successful income streams for restaurants include:
- Offering signature gift baskets, foods, condiments or merchandise
- Providing catering services
- Hosting parties and events
- Starting a food truck or delivery service
- Building the takeout business by distributing menus, installing a fast-serve counter or kiosk or preparing boxed lunches or meals for sporting events
- Writing local or restaurant-specific cookbooks
- Holding cooking classes, afternoon tastings or food demonstrations
- Distributing prepared foods to local supermarkets
- Catering events off-site
- Selling retail items that relate to the restaurant, community, cuisine, food preparation or local sports teams
Menu Engineering
Menu engineering can effectively focus on the most profitable menu items and encourage customers to add complementary side dishes to their orders. For example, menus often include descriptions after listings, such as, “Add fries, slaw and a drink to any of the above items.”
Shading or boxing critical foods on the menu makes customers more likely to order them. Menu engineering is a tool that restaurant managers should investigate for its power to increase sales. For example, keeping prices in columns encourages customers to order cheaper items. If managers don’t understand the principles of menu engineering, they can get professional help designing their menus.
Upselling to Existing Customers
Restaurants spend more on payroll than other expenses, so using employees to generate sales makes sense. Getting to know customers makes it easier for servers to offer relevant suggestions. Technology tools also encourage customers to buy more. Apps like tableside and mobile ordering, virtual sommeliers, digital message boards and online menus ignite sales, but nothing sells, as well as thoughtful suggestions from a trusted server. Techniques for server upselling include:
- Ensure each server knows the menu, ingredients, and anecdotal stories about the cuisine and the restaurant’s suppliers.
- Never deliver the guest check too soon or assume customers won’t order dessert.
- Make specific suggestions based on the customer and their ordering history.
- Recommend side dishes and appetisers that complement the entrées that customers order.
- Ask whether customers want an alcoholic beverage or wine with their meals.
- Recommend top-shelf liquor when customers order a cocktail.
Problems with Generating Extra Restaurant Income
Generating extra income in restaurants has its drawbacks. Managers don’t want to be pushy or focus on alternatives so forcefully that regular service suffers.
Training Sessions for Staff
Sometimes, getting staff to recommend products and upsell customers is challenging. Managers can help by offering tips and strategies to staff to increase guest checks and servers’ tips. Most diners base check tips on the check amount, and managers must stress this. Additionally, restaurants can offer employee incentives for achieving higher guest check averages.
Upselling doesn’t come easy for some people, so training servers is time well spent. Create mock scenarios where servers can fine-tune their selling skills. Train staff in how to sell and serve wine. Instead of asking if a customer wants a salad, a server gets better results by focusing on a specific dish like “peppery arugula greens with cranberries and pecans.”
Training staff on recognising sales opportunities and upselling without becoming intrusive are valuable accomplishments that deliver increased sales and better customer experiences. Techniques for educating staff include:
- Providing descriptions for servers to use when describing dishes.
- Hosting role-playing demonstrations
- Holding contests for achieving specific goals, such as selling the most desserts, gift cards or merchandise
- Training servers about the ingredients used in food
- Educating staff about available wines
- Providing samples so that servers know how foods taste
- Explaining the best accompaniments to each dish
- Identifying the highest profit items and encouraging staff to recommend these items when appropriate
- Observing staff after training and giving suggestions and advice for improving their performances
Failing to Use Customers to Generate Revenue
The most successful restaurants encourage loyal customers to write reviews, bring friends and buy value-added products and services for mutual benefits. If restaurants don’t take advantage of these opportunities for extra sales, other restaurants, retailers and online marketers certainly will do so. Wasted sales opportunities for restaurants include:
- Asking customers for referrals and reviews
- Getting diners to consider hosting parties at the restaurant
- Providing incentives for restaurant loyalty
- Using customer-generated content for advertising and promotion
Allowing Waste and Misinformation to Limit Profit
No matter the revenue-generating strategy, restaurateurs must approach the effort wholeheartedly and professionally. Don’t expect sales to come automatically without creating a business plan and marketing the service.
Each part of generating revenue needs careful planning and execution for success. Unfortunately, staff often ignore the sidelines and alternative income streams, which could cause extra expenses and waste unless they’re actively promoted.
Misinformation could also prove damaging when servers don’t correctly explain alternative services, additional food choices and preparation options. Restaurants get the best results by holding ongoing training sessions for their staff. Restaurants increase sales by upselling products and services, marketing proper merchandise and turning loyal customers into unpaid marketing champions.
