Historically, average restaurant profit margins are low, in part because expenses are generally high.  Low profit margins will leave any business with little to cushion a blow like the one restaurants have taken from COVID-19.  As a result, many restaurants are in financial trouble, and it wouldn’t be surprising to learn that many are questioning what they could have done to have been in better position to survive this.  So, perhaps this should be a wake up call for many restaurants.

An average profit margin is just that – an average.  Averages are of course, the result of a combination of numbers both higher and lower.  My point is that some restaurant operators have figured out how to produce higher profit margins, and if they can do it, so can you.

Simple but not easy

Years ago, when news would break that a prominent restaurant had gone out of business, my mother would always say, “but they were always so busy.”  Being busy or having high volume is no guarantee of profit.  Obviously, there was more money going out the back door in expenses than was going in through the front door in sales.  It’s really that simple.  Sell more and spend less.  Don’t roll your eyes at that.  It’s simpler than you think.  Simple however, isn’t always easy.

And most people’s thoughts here will go straight to costs.  If you’re busy and your sales are high, then the problem must be costs, right?  Probably, but just because you’re busy, perhaps even full with a line up at the door, don’t assume there’s no room for improvement, maybe even significant improvement, from your sales.  So again, this should be a wake up call for restaurants.

Want a huge payoff?

We need to do and be better for our customers, for our staff, for ourselves and for our restaurants.  Of all the restaurant managers I’ve known and worked with over decades, few have ever been willing to examine whether they could improve, and even fewer were open to actively working on themselves and committing to excellence.  In their defense, the commitment to excellence and personal growth is a big one.

It’s not easy to make a commitment to yourself and follow through because it’s too easy to let yourself off the hook.  You’re more likely to keep a commitment to someone else, like your management team, your staff and your customers.  And the payoff is huge!  Not only do you have the reward of the achievement, you’re more likely to have buy-in from your management team and staff, because you set the example and show true leadership by going first.  And wouldn’t it be great to stand back and watch them all act on your example?

Time to reboot

This is a great time to take stock and examine the way you operate, for your customers, the public and for your own people.  If there’s anything you’ve always wished you could improve on, or that didn’t sit right with you, this is a great opportunity to do something about it.

We all expect that things will be different after reopening your restaurant, but how?  If there’s one thing that I’ve learned about change, it’s this:

If you change nothing, nothing will change.

When you reopen for business, you should look closely at your main categories of income and expenses.  What can you do to operate differently that will boost your sales and streamline your costs?  Will you examine your rate of staff turnover and the contributing factors?  Will you hire differently?  Will you train differently?  What about post-training conditioning?  Will you change the expectations you have for your staff?  Will you set a new expectation of excellence?

What about your team?

Do your employee policies convey respect for your people and their well being?  Do your people feel valued & respected?  Do you have a meal program for your staff?  Do you offer discounted staff meals at cost, or are you profiting from your staff?  Do you have healthy food choices available to staff?  Are your staff and/or managers consistently overworked?  And if you want to know the answers to these questions, how will you find out?

This is an opportunity

Saying that this should be a wake up call for restaurants is really just another way of saying that this really is an opportunity.  Your people will recognize that improving your bottom line is better for them.  If they never believed that before, they may be thinking differently now.  For your serving team, there is a direct connection between sales and tips, and it’s essential that you help them remember that connection.

Take advantage of the time you have right now to reflect and plan.  Make a list of the areas that you want or need to improve on, and don’t leave the concept of improving sales off the table.  Plan the implementation and schedule it.  Start having those conversations with your management team and get them on board as soon as possible.  This is not only an opportunity to improve your operations & bottom line;  it’s an opportunity to improve your life for the future and for everyone in your employ.  Change is not always easy at first, but everyone will appreciate and respect you for it in the long run.