It’s hard to increase margins, one might say, but the solution is most of the times right under our nose, in our menu.
What I find interesting is that only a few restaurants are interested in detailed numbers, the majority just take joy into what they think is profit at the end of the working day. I, myself. made that mistake, but then I started working for an international hotel chain, and boy, the numbers suddenly become your life!
It´s been tested and proved that food accounts for 66% of the restaurant sales, while drinks the rest of 34%. Only by having this information, you could start drafting and designing a new menu. Furthermore, food is also categorized into: deserts, accounting for 19%, then appetizers – 31% and main course – 49%. Now you have an idea of which items should be promoted.
But before skipping to promotion on the menu, some numbers need to be crunched. You can now calculate your profit, see what’s the cost of raw material and decide on the selling price. There are different ways of how to calculate your selling price, what I find easy is to take a ratio of 25-75, where 25% is the cost of food from your selling price and 75% is profit. Of course, you can play with this ratio, always taking into account your sales log: what items sell more per day, per week, per season etc.
Don’t forget about the drinks: when it comes to wine and beer by the glass, they often have lower labor cost than mixed drinks, so you can take that into consideration as well when setting your price.
Make the best of your menu, don’t cut corners, as it takes customers only 109 seconds to scan a menu and you really want to lead them to the items with the highest margins!