Driving Profit - Part 1 of 6

Cash flow has always been the lifeblood of a restaurant business. And now, more than ever in my lifetime, we are seeing just how important good cash management is to a restaurant's longevity. Since profit is a key driver of positive cash flow what better way to kick off my LinkedIn newsletters.

If you read my posts regularly you know I’m a believer in the fundamentals.? Wayne Gretzky did not become the greatest hockey scorer ever by working on trick shots.? He spent time every day hitting targets with his slapshot and wrist shot.? And the same principals apply to the restaurant business.? There will always be new ideas, new trends, better tools and software, and new distractions.? But the way to improve the profitability in your restaurant or bar will remain the same no matter the tools you use.? Increase revenue and/or decrease expenses.? And breaking that down a little further the whole process comes down to managing just 6 things.? Guest count, average guest spend, cost of goods sold, labour cost, overhead or fixed costs, and following a forecast or budget.? If you can master all 6 areas, you will have the best chance of success.? If you can even master just 2 or 3 areas, you will be ahead of the pack.?

Guest Count

The process for any improvement starts with understanding where you are currently and then tracking the effectiveness of your efforts over time.? Every decent POS can track guest count if your staff use it correctly.? That makes step 1 reviewing how your staff use the POS and implementing some new training and standards if they do not currently enter actual guest counts.?

Step 2 is where the real work begins.? Increasing your guest count is a marketing activity.? It is about making sure that more and more people know what you do and what your reputation is so that the people who are looking for what you do can find you.? Even if you have a loyal following, thousands of google reviews, rated in the top 3 on Trip Advisor and Yelp, strong social media engagement, and steady sales you could probably do more to increase your guest count.

Think about it this way.? Circumstances change.? People move away, they find new favourite restaurants, they change their spending habits, and, in the end, we all die.? No matter how entrenched your restaurant or bar is you will naturally lose customers over time.? Which means you need to be regularly adding new ones.? And if you want to improve your profits, it helps to be adding more than you are losing.?

The Process

I am not a marketer. This is not a treatise on marketing. it is intended to get you thinking, and hopefully, taking action.

If you have ever tried to lose weight or get in shape, then you know the most effective part of the process is consistent effort.? And the same thing applies to increasing your guest count.? Let’s say you use social media as your primary marketing vehicle.? Are you posting essentially the same content to the same followers over and over?? That is an important part of the strategy, continuously reminding people why they love you.? But you also want to be regularly working to grow your number of followers.? Try increasing engagement in your posts and monitor the types and content of posts that naturally draw the most engagement.? But what else can you do??

In every type of business, word of mouth referrals become the most loyal customers.? What are you doing to help your current customers refer new ones to you??

Have you explored any other types of advertising, even the traditional ones like radio and print?? Do you do any cross promotions with other restaurants or other types of business?? What can you do to improve your local reputation??

And what are you promoting?? Maybe happy hour and ? price guacamole night are steady for you but that doesn’t mean you can’t do one-off promotions or change up other nights to have something different to talk about.? And try not to lose sight of the value of retaining regulars.? Just skimming this article shows how much work goes into attracting new customers.? Devoting some energy to developing your base of regulars goes a long way on the bottom line.

Consistency and Compounding

To achieve consistency, it can help to dedicate time each week to a concept.? If you dedicated 1 hour a week to increasing your guest count, over and above whatever you are doing now, you would have time to brainstorm, discuss, work out details for, and execute on new strategies.? That may sound like time you don’t have.? Or it may sound like it is not enough time.?

But if you can find that 1 hour block each week, then after a year you will have added 50 hours of energy to increasing your guest count.? What would it mean to your business if you added 10% or 20% to your sales?? And what if you could do that year over year just by spending 1 hour a week focusing on one aspect of improving your profit?? If you know anything about investing you’ve heard of compounding.?

Invest in yourself and let your effort compound your success over time.?

Breathing Room

Increasing your sales is one of the best ways to give yourself breathing room.? When more money is flowing in, you tend to have more flexibility in what you can do with it.?

That's me in the picture above. I'm not just some guy who got a degree in accounting and decided to work with restaurants. I was a chef first. A College teacher second. A restaurant group CFO third. And now our bookkeeping company helps restaurant operators improve their cash flow every day.

If you're ready to make your cash flow grow then visit us at Foolproof Bookkeeping and book a call today.