Restaurant Yield optimization is an advanced technique for restaurant profitability, but there is nothing stopping all Restaurants from implementing some of the easier techniques.
We discuss how it can work in your Restaurant.
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Restaurant Yield optimization is an advanced technique for restaurant profitability. If you want to make sure you’re creating good food, good value, and good services, without leaving any value on the table.
This is part 2 of our tips for restaurant yield optimization. If you missed the first part, check that out here
Yield optimization is a concept that comes from the airline industry, but has found massive success in restaurants too. It’s all about using tricks to segment your market to be able to get as many seats filled as possible, all while charging them the right price.
Here are more of restaurant yield optimization ideas you can use for a major boost in your profitability:
Happy hour is a great restaurant yield optimization tactic that many restaurant owners overlook, but it’s a great way to create extra seats and get extra revenue in your restaurant during hours you’re not potentially open.
Between lunch and dinner services, there’s down time where you’re not potentially open and your staff are just out back, preparing for dinner. People won’t usually come in during these hours, but you’re still paying wages.
Happy hour is a great way to generate revenue during the slow hours in the afternoon and it helps fill seats for dinner too. People are more likely to dine in restaurants with a few people already inside than in those where they’re going to be the first to be seated.
Having a happy hour menu doesn’t need to be complicated. As your team prepares for dinner service, you don’t want them running around cooking up another range of meals too. These can be light dishes that are simple and quick to prepare and can be served almost instantly, along with drinks that people can enjoy as they find a place to unwind after a long day or before they go to their next destination.
Dynamic pricing is another sure fire way to increase profitability. If you would go back to the root of yield optimization and think about airlines, it’s very rare that you’ll be sitting next to someone who paid the same price you did.
If you’re running multiple services in your restaurant throughout the day, that’s already dynamic pricing. Lunch services don’t cost the same as dinner services, the latter is always more expensive. Lunch is quicker and lighter because most people are in the middle of the work day and always on-the-go, while dinner is much heavier because it’s their last meal before they turn in for the day.
In most restaurants, a surge of people always come in during Friday and Saturday nights and they take advantage of these two busiest nights to put dynamic pricing in place. You can do this too, if the majority of your revenue comes from these days.
You can set premium prices that are about 15-20% more for your menu on Fridays and Saturdays, give discounted prices on weekdays, or have an entirely different menu that costs differently on the busy days to justify the price changes.
Having dynamic pricing in place will allow you to take advantage of the surge of people on busy days and the discounted prices will draw more people towards the slower days, giving you revenue all week long.
How do you create a busy Tuesday night? You run an event.
Running events is an ageless way of increasing your profitability. If you have a restaurant that can provide a hundred seats and you fill that during a Tuesday night, that’s a huge increase in your revenue for the week.
A lot of owners shy away from the idea of running events because of the fear that no one will turn up and that’s completely normal. It is a bit of an art and you need to dedicate time to it, but if you pull it off the right way, it can make such a big difference in your profitability.
Events won’t only give you revenue on a slow day and fill your seats, it will also give you a little extra publicity and content for your marketing and social media. It’s going to draw more attention to your restaurant and it’s going to encourage more people to come by and look out for your future events.
A couple of event ideas are pairings, collaborations with other local businesses, classes and workshops, and many more.
No matter what kind of restaurant you’re running, there will always be groups of people who have at least one person who always chooses the most expensive item off the menu. Maybe it’s their way of securing the best experience in your restaurant, showing off to their group, or simply because it’s what they went there for – you can always expect that someone will order your premium products.
Premium products in your restaurant should be something you can charge significantly for. It can be a local delicacy, a specialty, or even an experience.
You can present local delicacies or specialty dishes as your premium products, make them the focus on your menu, and have your servers offer them to the customers when they’re ordering.
If you’re going for experience, you can provide them with unique seats like a chef’s table or window seats if you have a great view. People will gladly pay extra for these tables because of the experience that they get from it.
Your premium products should be the highlight of your restaurant if you want to make sure it drives revenue. Have your servers offer it every single chance they can, have them printed out beautifully on your menus along with encouraging descriptions that will allow people to validate their decision to go for the premium products you’re offering.
Put Your Prices Up
If there’s one ultimate way to quickly increase your profitability, it’s to put your prices up.
Many owners hesitate to hike their prices up because of competition and many other factors, but what’s interesting is that nobody will even notice if you do! We’re talking about a 5% price increase and not some huge 25% increase and it’s relatively small, but it can drive your revenue up by about 50%.
Most of the time, people come to restaurants more because of the experience they’re getting than the cost of the food that they’re buying. If you know you’re providing value to your customers and you know how to articulate that value, it will give them a mechanism to come back regardless of your prices.
It could be the way you present your meals, the way your staff cleans up the place, or simply the way your servers greet customers regardless if they’re regulars or first time visitors. These are the factors that will make those price hikes reasonable and almost unnoticeable.
Different menus per night are more of a pub thing, but when you’re doing it right, it can be a great opportunity to upsell and drive revenue.
Many restaurants are already doing this by serving specialty food on different days or having certain dishes discounted on Tuesdays or Wednesdays, when it’s typically slower and there aren’t a lot of people. It’s a really great way to pull people in during slower days and it allows you to make a great impression on new customers.
An interesting trick for different menus you can use for your restaurant is by offering something that you wouldn’t normally do on a Friday or Saturday night. Maybe it’s something that can look and taste great that’s perfect for customers who are looking for something new and for your social media and marketing too.
Having these available only on certain days will draw people to come back on your off-peak days, giving you more attention and an increase in your weekly revenue.
Birthdays and Anniversaries
Many people like to celebrate their birthdays and anniversaries by having a nice dinner in a great restaurant. They usually do it on Friday and Saturday nights, but there is a way for you to draw them in even if their birthday or anniversary is on a Wednesday.
You can run birthday campaigns and anniversary promos in your restaurant that will have customers come in on their actual birthdays and anniversaries. It could be a freebie like cake or a bottle of wine, or it could be a special discount if they celebrate with you on the day itself.
It can also be a group campaign where the birthday celebrant gets a free meal or a quarter of the bill off if they bring at least 3 of their friends on the week of their birthday or on their birthday.
Birthday and anniversary campaigns will help you drive less people from your peak days towards off-peak days, giving you more breathing room and a sure boost in your profitability.
There are a lot more ways you can manage yield optimization for your restaurant, but these are some of the best and most effective ways that many restaurants have been doing it. We hope you’ve found value in this episode that gave you ideas about how you can drive an increase in your restaurant’s profitability!
Make sure to check out the Secret Sauce Podcast for more advice, tips, and tricks!
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