How to Run a Profitable Restaurant

Running a successful restaurant is no small feat. With the question of how to start a profitable restaurant business, there’s no one-size-fits-all answer because your restaurant has its own unique needs. However, there are some things that are just universal such as the 12 things we list below:

1. A solid business plan

Restaurants that didn’t make it past the first year have one thing in common–they didn’t have a sound business plan that outlined their plans to successfully launch the business and make it profitable. So before you even think about what dishes to offer, you need to have a sense of direction and develop a clear path for yourself. Here are things that you need to outline in your business plan:

  • Definition of the brand
  • Mission and vision
  • Products and services
  • Competition analysis
  • Startup costs and operational costs
  • Ongoing business expenses
  • Realistic projections of profits for the first three years
  • Staffing and training
  • Marketing and advertising strategy

If you want to know how to run a profitable restaurant, define your target market and formulate business strategies and concrete marketing plans, and set realistic timelines so you can quantify your goals and measure your success. At this initial stage, you need to acquire the necessary permits and decide whether you want to form an S Corporation or an LLC.

2. The right location

Choosing the location of your restaurant is one of the most important decisions you’ll ever make. If your restaurant is located at the wrong place, you won’t be able to tap into the customer base you need to grow your business.

Make use of U.S. Census Bureau tools to determine if you have enough of your target market in your area of choice to keep your restaurant afloat. The location should be able to draw customers in by foot traffic or is easily accessible and visible. Always take parking space into account if you are in a location that you know people will have to drive to.

Even before you think about how to run a profitable restaurant, you will have to research other restaurants in the vicinity anyway. Sometimes, thrusting yourself in the middle of your competition where there are customers you can “steal” is the best way to do it, especially if your concept is unique enough.

3. The perfect menu

Craft a perfectly targeted menu for your customers. Don’t overwhelm diners by giving them way too many choices. Sometimes, simplicity is the way to go. Instead of offering a sundry of mediocre food, keep the selection small but make sure each dish is excellent and high-quality.

Establish unique specialties that guests will always come back to. Depending on your concept, you might benefit from a customizable menu that will allow diners to put together their meal of choice.

With a winning menu ready, you’re halfway there. The rest would involve actually being able to entice your customers with your food items by communicating the experience and flavor with pictures and words. Incorporate digital menu boards as a tool to dynamically display and update your culinary masterpieces, making them visually appealing and engaging. These boards blend seamlessly into the customer’s experience, offering real-time updates and vivid imagery that elevate the perception of your offerings.

Sometimes, you might need to change up the menu every now and then just to keep things fresh and attracts new customers while keeping patrons excited.

4. Manageable expenses and inventory

Keep track of everything! You should know where each cent goes and where every piece of your inventory is. How else would you know if your business is making money?

Is your inventory utilized efficiently? Some servers might be overpouring the drinks or skimping on the food serving.

Know when to replenish your stock and how much you need. Pay attention to how it all moves in and out during your busiest and slowest hours. This not only helps you avoid waste and overordering, but you are also able to identify which dishes are most profitable.

Especially if you are new in the game, it will take several months to recoup costs. Be ready for unexpected expenses such as maintenance, design or construction changes, and utility. Look for ways to keep costs low without compromising the quality and integrity of your restaurant. You can use a business expense tracking software to help in recording expenses. When you have an organized financial record, creating a business budget is easier.

5. Ideal ambiance and aesthetics

Add personality to your establishment. In this day and age, social media-savvy diners will flock to a restaurant simply because it is “Instagram-material.”

Notice how many people in the comments of a Facebook or Instagram posts of someone’s recent restaurant jaunt ask where that place is. When it looks good, people would want to know where that place is so they can experience it for themselves. The best part? They share the experience and photos online, which can help you gain social proof.

6. Diner comfort and kitchen efficiency

A well-designed restaurant is efficient, cost-effective, and spacious. Everything from the lighting to the table setting and spacing between chairs and tables should work together to achieve the ideal restaurant layout and space for both your customers and staff.

The most important thing is your customers are comfortable. For a lot of people, comfy seats and tables with adequate elbow room are enough because if they’re hungry, they just want to be able to eat.

Of course, you shouldn’t discount the power of a warm and welcoming atmosphere. It should be a place where people will actually enjoy dining in. After taking care of that, you can start thinking about what amazing things you can put on the walls for them to look at.

At the same time, your kitchen should be designed for efficiency to manage costs, streamline prep and cooking processes, and avoid product spoilage. Your commercial restaurant equipment should be arranged in a way that will help the staff work faster and more efficiently for maximum productivity.

7. Reliable equipment

Parts of how to run a profitable restaurant is using the right equipment. While sticking with used equipment is the obvious choice for restaurant owners short on cash, think about what brand new equipment can do in the long run. Sure, they come with higher price tags, but that buys you warranty and peace of mind. You know they have a long service life ahead of them and that they won’t break down in the middle of your operation when you need them most.

Additionally, it will also be easier to service and find parts for new equipment as opposed to second-hand machines, which may not have been maintained properly in the first place. Plus, your supplier can offer reliable customer support, attend to your needs, and provide required replacement parts quickly. If at some point, you’ll need to resell your equipment, you’ll likely be able to do so at a higher value.

For something as vital as ice, you want to be able to produce a steady supply with minimal manual labor and maintenance costs. For that, a Manitowoc ice machine will be a great choice. If you will do a lot of baking and roasting, you should have a complete set of bakery equipment.

8. A fun and friendly staff

Your staff will be the face of your business and will always be part of the dining experience. Sometimes, a horrible server might take away from the excellence of your menu. The bottom line: Your staff is an investment in itself. Make sure you work with fun, friendly, trainable, honest, and competent people!

9. Familiarity with restaurant processes

It pays to familiarize yourself with all the core processes of your business. Learn more about the cooking process or work the counter. It can be really enlightening to take on these roles yourself first because you probably won’t afford to hire people with the matching experience early in the business anyway, and you will know if it’s being done right by the time you can.

Understanding health and safety processes are just as important too. What’s the point of the perfect concept if you can’t get your business up to code? Establish processes and procedures for food storage, cleaning, and bussing tables. Train your servers for proper food handling.

10. Adapting to foodservice trends

Keep up with the latest trends in foodservice and be open to adapting. For one, more customers are switching to a healthy lifestyle, so alcohol, even with its high markups, may not make sense for your target customers.

Plus, make an effort to win over the new generation of diners–the millennials, who will soon make up 75% of the workforce. Millennials will eat out at least once a week but enjoy the convenience of food delivery. They also prefer organic and locally grown ingredients.

They don’t just want good food. They go to a restaurant not just to dine, but to have an experience. Millennials can be very picky, but most of the time, the way to their stomach is picture-perfect food, creativity, a good story, customization, and convenience!

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William Woodall

Hi, My name is William Woodall, and I am a person who is determined to make the world a better place. I like to be around people and enjoy adventure and challenges.
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