What is the best way to run a restaurant?

Posted by Damian Roberti on

What is the best way to run a restaurant?



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 What is the best way to run a restaurant

In this article, we will cover some tips for managing and optimizing key restaurant operational costs.

1. Keep a close check on the monthly rent as well as any other costs.

You will never be able to avoid paying rent if you want to run a restaurant, so it is critical that you carefully review and discuss the terms of any lease agreements you are considering signing or that are coming up for renewal. If you are interested in renting space for a restaurant, this information can assist you in negotiating the most favorable terms available.




What is the best way to run a restaurant

Rent, energy, gas, water, internet, administrative and legal fees, and insurance are all examples of overhead costs. These are the expenditures that you will need to pay even if they are not directly related to the production of your product or service. It is essential that you have a good understanding of how much of your monthly budget will be allocated to overhead expenses; therefore, it is important to keep track of the costs that are semi-variable (like utilities) and variable (like legal bills) (like legal costs). If they are increasing, you need to determine the cause of this trend.

2. Check that you have all of the necessary permits and licenses in your possession.



What is the best way to run a restaurant

Before you can even start looking for a location for your restaurant, you will need to take care of a large number of permissions and licenses. A business license, certificate of occupancy, Employer Identification Number (EIN), food service license, and liquor license are typically required, however the specific requirements may vary depending on where you live. You may obtain additional information regarding each permit, in addition to ten others that you could require, by consulting our guide to restaurant licenses and permits.

When running a restaurant, it is often necessary to retain the services of a lawyer to assist with all of the aforementioned permits as well as any other complex issues that may arise during the restaurant's opening or after it has opened. If you find yourself in a bind, you should seek assistance from an experienced person. It will cost you money up front, but it will end up saving you a significant amount of money over time.


What is the best way to run a restaurant
3. Make sure that the cost of labor is accounted for in the budget.

In recent years, labor expenses have increased, and boosting employee pay can be a major move for longstanding owners. However, your people are your number one investment, thus it is no longer negotiable to ensure that they have stable income that allow them to live a comfortable life. If you are just getting started in the restaurant business, you should make it a priority to pay a rate that allows your staff to make a decent living right from the beginning.

In any scenario, the following are some of the ways that you might reduce other expenses to make up for the high cost of labor:

Raise the prices of your meals and beverages. You might include a message in your menu that explains why you are increasing pricing and shows that you are caring for your staff in order to demonstrate that you are doing something positive for them.

What is the best way to run a restaurant

Examine the prices that may be altered, and determine where you can make reductions. Costs for being late, food waste, commissions for delivery services, and fines for generating too much noise are some examples of the types of fees that might be assessed.

Utilize the new Steps of Service method, which enables restaurants to do their tasks with a smaller crew while still providing a competitive wage for their employees.

4. Make it a habit to frequently check the prices of the food you buy.

What is the best way to run a restaurant
Understanding how much money is spent on food and what proportion of total costs are attributable to food purchases is a significant aspect of running a restaurant. Keeping a watch on expenses is very important, especially in this time and age when inflation is so rampant that the price of virtually everything that is required to put food on tables has increased. It is an excellent method for locating establishments in which edible food is discarded (and wasted money).

You are able to calculate not just the total cost of your meals but also the proportion of that expense that is attributable to food. In addition to this, it is helpful to break things down and figure out how much each item on the menu costs. If some of the ingredients have increased to the point where they are unaffordable, the food cost percentage of the item on the menu will go up, and you will be faced with the decision of whether to raise the price of the item or remove it (along with the ingredient that is too expensive) from the menu. This is an example of menu engineering, which is a fantastic method for making more money while also reducing the amount of garbage produced. What is the best way to run a restaurant

5. To promote your business, you should utilize both paid and unpaid advertising strategies.

What is the best way to run a restaurant

The marketing of a restaurant is an essential component in the process of bringing in additional revenue. Many proprietors of restaurants that have been in operation for a number of years are taken aback by how simple and effective it may be. There is such a wide variety of options available, including but not limited to email, paid advertisements, social media, fliers, sponsorships, and collaborations.

Using a restaurant marketing plan template, carefully plan out all of your different promotional endeavors, and monitor the degree of success achieved by each one. While email marketing may be more effective for one company than targeted ads on social media for another, both may be beneficial for your company. It is essential to engage in a variety of experiments in order to determine which approaches are successful.



What is the best way to run a restaurant
6. Plan the interior of your restaurant and make it feel friendly and inviting by giving it a warm and cozy atmosphere.

If you're opening a restaurant from scratch, the design of the space should be one that's warm and inviting, well-organized, and consistent with the rest of your business (that includes your type of food, uniforms, social media, signage, and more). There are certain restaurant brands that are vibrant and garish, while others are subdued and sophisticated. No matter what your restaurant's brand is, the interior design should always be consistent with it.

And if you want to improve the look of the interior of your home without spending a lot of money, you may do it by incorporating things like new lighting, plants, and local artwork, among other things.

7. Put some of your profit toward the cost of employing an experienced restaurant manager to assist you.


What is the best way to run a restaurant

What is the best way to run a restaurant

Because no one individual can do everything by themselves, utilizing the skills of professionals is an essential component of successfully operating a restaurant. It is essential to have excellent equipment repair techs, lawyers, accountants, and other advisors in your circle so that you are prepared to deal with any issues that may arise.

8. Invest a significant amount of money on purchasing the most advanced technology and equipment for your business. 9.

Invest in a platform that gives you the ability to manage almost every aspect of your business in a single location, from sales and marketing to takeout and delivery, managing your staff, keeping track of your inventory, and keeping the books. This includes managing your inventory and keeping the books.

The Step-by-Step Guide to Running a Successful Restaurant Even If You Have Never Owned One Before

When you try anything brand new for the very first time, it is difficult to be perfect in every way. Even if you have never managed a restaurant before, there are a few things you can do to increase the likelihood that your establishment will be profitable.

First, you should engage in conversation with those who work in your industry. Before you get started, you should get in touch with the proprietors of local eateries, ask them to meet with you, and get them a cup of coffee while you listen to the recommendations they have for you. Nobody in your town or city will know how to run a restaurant better than someone who is already working in the industry there. They will tell you who to go to at government offices about permits, which suppliers work best, and who they employ for accounting, legal concerns, and maintenance. In addition, they will tell you who to talk to about suppliers who perform best.


What is the best way to run a restaurant
Prepare yourself to fill out some forms. There is never a shortage of documentation, including authorizations, licenses, contracts, bills, and payroll records. Locate an online course that will teach you the fundamentals of accounting or payroll administration if you do not have much experience in either of these areas. If your company's finances and payroll are in disarray, you cannot expect anything else to be reliable.

What is the best way to run a restaurant

You are well aware that managing other people is the most crucial aspect of your job. It can appear that sourcing and creating the best cuisine and drinks is the most important aspect of running a restaurant, but the focus should truly be on the customers.

Put a significant amount of money into your team to position yourself for sustained success. Because you won't have to hire and train as many new individuals, it won't take nearly as much of your time and it won't cost nearly as much money over the long term.

How can those who have been in the restaurant business for a considerable amount of time enhance the way they run their establishments?

Many people who own restaurants find that after they have been in business for a considerable amount of time, they reach a point where they are unable to produce any more profit. However, costs continue to rise, and business is as competitive as it has ever been, so it is essential to be open to new ideas and maintain a flexible mindset.

There are a lot of things that owners of restaurants that have been around for a while can do to increase their sales and margins, keep their costs under control, and make more money so that they have more capital to invest in expanding their businesses.

The secret to increasing a restaurant's revenue and customer base through increased sales

What is the best way to run a restaurant

Marketing Utilize a marketing plan as a guide while also experimenting with a variety of marketing approaches for your restaurant (email, social media, paid ads, and sponsorships). Keep an eye on the findings as you contemplate your next move.

Costing for menus and developing menus. It is essential to keep a close check on the expenses of food and to frequently review the menu in order to ensure that the prices are appropriate and that things are moving well off the shelves.

There are a lot of different things that may be done as promotions in restaurants, such as offering half-priced beverages on Tuesdays, having live music during brunch, offering 15% off appetizers, and not charging a delivery fee. You should test each one individually to see which one your consumers prefer.

How to reduce expenses while simultaneously increasing financial gain

Take a look at the evidence. It is simple to determine which parts of the day require additional advertising, which dishes aren't moving any product, and what the sales projection for the week is when you use the data and analytics dashboard that comes with your restaurant POS system.

Utilize intelligent inventory management software. Toast Inventory Management gives you the ability to automatically keep track of the worth of your inventory regardless of whether the pricing of your components have increased or decreased. In addition to this, it enables you to derive insights for your COGS reports based on the figures of your beginning and ending inventory.

Avoid wasting any food. Do not be wasteful with your finances! Establish guidelines to prevent the loss of food due to improper handling. If a certain component of a meal is being thrown away at an alarming rate, it is probably time to remove that item from the menu.

A break down of the running expenditures as well as performance indicators for successful restaurants

There is a large amount of variation in the restaurants' average costs and income. Compared to a high-end taqueria with a large patio and live music, a mom-and-pop sandwich business, for instance, will have a lot lower profits and will be far easier to run than the taqueria.

It is expected that the costs associated with opening a restaurant will range anywhere from $95,000 to $2 million, however operational costs are typically presented as a proportion of sales.

The expenses involved in operating a restaurant and various benchmarks

The following are the five primary categories of costs that are incurred on a consistent basis by a restaurant:
labor cost
the cost of food
professional assistance from qualified individuals

What is the best way to run a restaurant

In most cases, thirty to thirty-five percent of money is used to pay for labor, while another 32 percent is used to pay for food. The cost of utilities contributes an additional 5% of total revenue. The sort of restaurant and the number of locations that it operates will have a significant impact on the costs associated with things like rent or a mortgage, professional services, and technology.

If a restaurant is successful in its first year of operation and earns $300,000, the business will likely spend $105,000 on labor, $96,000 on food, and $15,000 on utilities. That leaves a total of just $84,000 to pay for everything else, including overhead, technology, professional services, marketing, and other other charges.

Restaurants are anticipated to have certain profit margins.

Because the average restaurant has a net profit margin of just 4–6%, this indicates that a restaurant with sales of $400,000 can only have a net profit of $7,000–16,000 (because the owner's pay is included in labor costs, these numbers represent only genuine profit). It is quite unusual for a brand new company to be able to achieve this level of success straight away; yet, a really successful restaurant can produce up to 16% net profit.

Maintain a level of awareness regarding the current state of the hospitality industry.

The restaurant industry is highly responsive to the shifting preferences of its customers. Because what is trendy in one year might not be in the following, proprietors of restaurants ought to work toward developing a strategy that can ensure their establishment remains profitable. They shouldn't just build a restaurant because it's the latest internet sensation.

However, it is beneficial to be aware of what is occurring across the sector as a whole. Engage in conversation with your contemporaries, register for restaurant industry publications such as "On the Line," follow a large number of restaurants located in your vicinity on social media, and read websites such as NRN, FSR Magazine, and Eater.

What is the best way to run a restaurant

Have confidence in your ability to run the restaurant.

Restaurant management requires a high level of expertise, but if you have a capable staff as well as the appropriate organizational structures and technological tools, it has the potential to be a very lucrative line of work.