39 – The Secret of Restaurant Profitability – New ways to look a Restaurant revenue and profit

We talk to Ivan Brewer from Restaurantology.

We talk about a Restaurant using a Qandoo website and the issues that poor SEO and not having a marketing strategy is really hurting one Restaurant in Sydney and another that is taking over $100,000 a year in online orders and how they are saving $13,000 a year by not paying commission on their online orders.  We talk about how much you should be paying for online Facebook campaign budgets for your Restaurant.

It is a sad fact that 50% of restaurants fail within 4 years and only make 2% in profit.

The biggest Restaurant profitability mistakes that people make when running a restaurant?

  1. People fall in love with their food and their restaurant without understanding the profit and loss, or even having a plan of how to be profitable.
  2. Not understanding key fixed costs.  11.6% of net costs are rent.
  3. Venues are often too big.  Large venues have 60% of revenue in 2 days of the week.


High rent as a percentage of revenue may not correlate to high foot traffic.  If it was high, there should be more sales.

How does labour costs relate to rent and cost of goods sold? How many staff do I really need?

We discuss restaurant productivity and ways to increase it.

Discretionary effort.  The more we engage our staff, the higher the productivity of the staff. Listen to your staff and their ideas.

Creating a vision and a story that your team can sell.

The KPIs for a restaurant business viability test – % fixed costs / % variable costs

Fixed costs like  – Accounting, Rent, variable can be things like linen and gas

COGS should be pretty consistent with a weekly stocktake and weekly P+L.

What is the labour %?

Understand the key distribution of costs and be able to adjust in real-time.  How can you influence the time spent in the kitchen with pricing.  How do you avoid bottlenecks in the kitchen during peak hours.

You should have a costed roster.  The dollar spend on a daily basis.

How can the distribution of the restaurant across the week.  Should we discount in the quiet times or charge a premium for the busy times.

How does the pricing of the bar work and what opportunities are there to increase revenue and profit from bar revenue.  Why should you discount on the bar, rather than in the kitchen?

What is restaurant sales velocity and how do you influence it?

Try rostering by 15 minute increments.

We discuss a lot of advanced way to think about the profit and loss and how you can influence how much of the revenue flows to the bottom line.

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