• 8590 Group

Diversifying Your Restaurant Profit Centers

Updated: May 18, 2019


We all know margins in the restaurant industry are razor thin to start with so why not diversify your restaurant revenue and develop some new profit centers to grow your margins and ultimately profitability.


Here are our favorite profit centers to diversify restaurant revenue:


Delivery

Whether you decide to do in-house deliveries or use third party partners (more on this coming in a new post soon), deliveries can fundamentally change a P&L statement. We have clients who ended up generating as much revenue as their regular business with delivery and takeout alone. However, to be able to generate the numbers you want, you need to make sure you are doing delivery right:

  • Design and create a dedicated menu from your current menu but for delivery.

  • Adjust your delivery menu pricing to compensate for third party partners and costs of packaging.

  • Use a company like 8590 Group to negotiate your delivery rates with third party partners. 8590 Group has a track record of reducing costs from 20-35% due to being a national account for delivery apps.

  • If you are going to be doing deliveries with a third party partner, why not use all the restaurant delivery apps out there. (remember, they drive traffic to you, not the other way around - that is why they get a percentage)

  • Integrate your delivery partner apps within your POS so you don't have to have multiple tablets and someone monitoring them.

  • Build a system and flow for deliveries that your staff (both BOH and FOH) can implement easily.

  • Create a checklist that staff can use when executing the delivery.

  • Use deliveries as a way to promote your brand and product by having promotional and branded materials for deliveries.

  • Grow in stages so that your staff can learn and adapt.

Takeout

Takeout is much like and quite complimentary to deliveries but with less cost associated. Again, it is also in the execution so make sure that your takeout profit center for your restaurant is setup properly:

  • Design and create a dedicated menu from your current menu but for takeout.

  • Adjust your takeout menu pricing to entice people to use takeout. Usually a 10-20% discount.

  • Setup your takeout menu online so people can pre-order and prepay for their orders. Having a system that simplifies takeout for guests who just want to pick up food that is fresh and hot on their way home from work will increase the revenue of this profit center for your restaurant.

  • Integrate your online pre-order system with your POS.

  • Build a system and flow for takeout that your restaurant staff (both BOH and FOH) can implement easily.

  • Create a checklist that your restaurant staff can use when executing the takeout order.

  • Use takeout as a way to promote your restaurant, brand and product by having promotional and branded materials for deliveries.

  • Grow in stages so that your staff can learn and adapt.

Large Groups/Corporate Events

Every restaurant owner says they love large groups and corporate events/buyouts but most don't have the infrastructure nor the system in place to manage these bookings efficiently nor do they have the tools and methods to increase the volume of the bookings. Here are some quick tips on how to properly generate more bookings and execute them flawlessly:

  • Do you have a private space/room that can accommodate large groups easily. If not, that is not a huge problem but you will need to get creative with your table layout.

  • Build the proper digital media strategy (content, ads, SEO, newsletter, listing sites) to generate more large group bookings such as birthdays, celebrations, wedding receptions, retirements, corporate lunches, corporate events, etc...

  • Have a proper lead generator on your website to capture the leads generated by your digital media strategy and your regular guests.

  • Have a CRM and Event Management APP that is integrated with your lead generator.

  • Have a dedicated person who's responsibility it is to respond to all leads in real time (few hours at the most during business hours).

  • Build a list of questions/checklist for the lead that needs to be answered in order to have all the important information about the event.

  • Have a set menu and family style menu for people to choose from. Of course, everything can be made custom but having menus and pricing creates a baseline.

  • Create a contract, banquet event order (BEO) and credit card authorization templates. (build automated PDF templates)

  • Create a large group/corporate booking checklist that your staff can use when executing the event (pre-event, during event, post event).

  • Create and manage a shared calendar (in addition to your reservation system) where events are posted along with key dates (deposit date, contract date, order cutoff date, follow up date, post event recap date, etc...)

  • Grow in stages so that your staff can learn and adapt.

Catering

Many restaurant owners tell us that they cannot do catering because they are not a catering company. We say that restaurants are better than catering companies as they serve food daily and have full time employees which usually means a team of people that cares. With minor changes and next to zero initial investments, you can build a brand new business out of your current business. Remember, you already have the food, the staff, the menus, the lease and the kitchen, all you are missing is the transport and onsite equipment which is typically paid for by the client so no real loss there. As always, just make sure you properly build, implement and execute this segment for the best results:

  • Build the proper digital media strategy (content, ads, SEO, newsletter, listing sites) to generate more catering orders. This can be for large events, large deliveries or even corporate lunches (100 lunchboxes for example).

  • Have a proper lead generator on your website to capture the leads generated by your digital media strategy and your regular guests.

  • Have a CRM and Catering Management APP that is integrated with your lead generator.

  • Have a dedicated person who's responsibility it is to respond to all leads in real time (few hours at the most during business hours).

  • Build a list of questions/checklist for the lead that needs to be answered in order to have all the important information about the event.

  • Create a catering menu that includes canapes, set menu, buffet menu, family style menu and personal size lunches/dinners that can be multiplied.

  • Know your costs and suppliers for equipment you do not have. Try to do this before you start, talk with rental companies and ask all the questions you can think of and then build a supplier spreadsheet with costs as well as what you will charge guests. Also know how much you will be charging for staff and transportation.

  • Create a contract, banquet event order (BEO) and credit card authorization templates. (build automated PDF templates)

  • Create a catering checklist that your staff can use when executing the event (pre-event, during event, post event).

  • Create and manage a shared calendar (in addition to your reservation system) where events are posted along with key dates (deposit date, contract date, order cutoff date, follow up date, post event recap date, etc...)

  • Make sure you have proper branding and promotional materials when executing the event without being tacky or overwhelming.

  • Grow in stages so that your staff can learn and adapt.

New Menu Segment If your restaurant is operating above 80% in its current segments and close to 100% from Thursday-Saturday nights, then you should really consider how to setup a new segment for your restaurant whether it be lunch, brunch, happy hour or late night. Whichever one you do choose to develop first (we recommend one at a time) really depends on the type of restaurant you operate and how your business is running. We tend to not recommend doing anything without data to support it so again, like everything, make sure that you properly execute the building of a new segment. Here are some quick tips to help you make the decision:

  • Am I operating above 80% currently?

  • Do I already pay staff to be here to do prep/setup during that time?

  • Is there a competitor within 200m that would compete directly with me in this new segment?

  • Which segment would be easiest for the restaurant and staff to execute?

  • Build a small but very tasty and visually appealing menu for the new segment.

  • Give great value and build the business over time.

  • Promote the hell out of it using a really good digital media strategy.

  • Can the team execute this without hurting the guest experience?

Rebate Programs

Many restaurant owners do not know that rebates/marketing support from your suppliers is possible, the ones that do often think it doesn't apply to independent operators. 8590 Group has executed many rebate deals for its customers and we can tell you that whether you are an independent or a large group, rebates are possible. Here is a list of what we have secured rebates for in the past for clients:

  • Liquor

  • Wine

  • Beer

  • Soft Drinks

  • Water

  • Food Products & Groceries

  • Cleaning Products

  • Paper & Packing Supplies

  • Dishwashers & Dishwasher Supplies

  • Printing

  • POS

  • Payment Terminals

*Note that not just the big companies offer this support but many smaller suppliers do as well.


League Sponsorship

This restaurant profit center applies to restaurants that typically have TV's and show sports on them. You do not need to be a sports bar exclusively though but so long as you have a lively atmosphere and can accommodate guests that are dressed in sport uniforms. It is a great way to increase business in midweek as most leagues play during the week.


This is how it works; you "sponsor" a sports team or sports league so that the players come to your restaurant after their game for drinks and food. The sponsorship comes in the shape of cash back at the end of the season based on a percentage of the total spend they accumulated during their season each time they came to the restaurant. You can also include incentives like paying for jerseys or some equipment.


Tasting Events

This is one of 8590's favorite restaurant revenue center because it not only generates income on your slowest night, it is fun to execute and is an amazing guest experience. We recommend a monthly occurrence whereas a special menu and beverage service is offered for a set price on the slowest day of the week for the restaurant. Here is how to properly execute:

  • Build out your first four concepts, menus and pricing. Examples are cheese and wine nights, olive oil tasting, vegetarian set menu w/ organic wine pairing, 5 course meal with beer pairing, whiskey tasting with food pairing, etc...

  • Each event should be educational, fun, innovative and exclusive. Something people do not see often.

  • Make sure you have the proper experts present during the dinner experience in order to make the guest experience even more special. Most of your suppliers will make themselves available as this is beneficial for them as well.

  • Have the proper digital media strategy (content, ads, newsletter, SEO) to promote the events (although Newsletter is usually sufficient to sell out an event).

  • Make sure you have proper coverage (photos/videos) of the event so you can show people what they missed.

  • Create a tasting checklist that your staff can use when executing the event (pre-event, during event, post event).

*Note that whether you use one of these or all of them, the results will be based on how well they are executed, marketed and implemented. Reach out to one of our agencies for help in building out your new profit centers.

10 views