How can you provide insights for restaurant owners in your market? We will discuss four different things a restaurant owner can do to increase the profitability of the business. First discussion was how to get first time customers. Second was how to encourage customers to return on a regular basis. Third was how to help a restaurant owner increase the average ticket size. And now today in the final segment we’ll discuss how to help the restaurant owner increase the profit per order. Perhaps an average order size might be $40.00. Of that amount $3 or $4 is profit for the owner. Let’s discuss how to raise those figures to perhaps $5 or $6 profit per order?
Here are a couple of ideas. Foundationally, two concepts must be understood. We’ve already discussed the first concept which is the fixed hourly rate of operating the business. Another basic concept is variable cost of ingredients; all the items which the restaurant owner must buy to serve the customers. The owner needs to realize that it is possible to track the inventory (ingredients) by item. Some items have a much smaller profit margin than others. For example, a steak will have smaller profit than a soda; the owner had to pay more to purchase the steak. In order to increase the profit per order, the owner must realize which menu items are the most profitable. One solution we offer restaurants is “advanced inventory tracking.” The restaurant is able to track each ingredient and the amount used in each recipe. Obviously, this solution is very time consuming to set up. Although a salesperson can set up the system to do the tracking, the restaurant personnel must enter information according to their recipes. Having this solution available will allow the restaurant to track the gross profit per order since they know how much the food costs to fulfill that order. This solution also allows the restaurant to track waste. At the end of a day the point of sales system may indicate six pounds of cheese was needed to fulfill the orders, but eight pounds of cheese was actually used. Therefore, scrutiny should be given to the recipe and method of serving to see where the waste is occurring. The owner can thus track by order and overall when doing inventory purchases.
Based on this information, the owner can make targeted offers to increase the profit per order. Train the employees to up-sale the more profitable items on the menu. Many such decisions which a restaurant owner needs to make to increase the profits are very simple. However, lack of availability of data is the problem. That’s what we can provide for owners with our point of sales system.
Hopefully this series has offered insights to help you as you interact with your local restaurant owners. Help them to understand these items. I look forward to hearing feedback from you concerning the training you need to make the difficult transition from transactional sales person to providing solutions for your clients. You can have a greater impact on your clients and make more money.
Stay tuned for the next series on “How to Sell.” I think you’ll really enjoy it!
Read previous article: How to Increase the Average Order Size – Restaurant Expert – Part 3
How to Increase the Average Order Size – Restaurant Expert – Part 3
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How to Respond to Initial Sales Objections