Quick Win 1: Bring ‘Em Back Restaurant Coupons
Give all first time restaurant customers a coupon with a simple offer redeemable on their next visit (perhaps a free aperitif, dessert or after dinner drink). The offer should have no conditions and should be redeemable within the next 6 months. Tell the customer to bring in the restaurant coupon and make sure to ask for information that you can add to your database. Measure the results, modify the offer if needed, and if it brings you more business, make this part of your marketing system.
Quick Win 2: Cut Restaurant Costs
Even though you are busy, it literally pays to take the time to review your restaurant costs every 6 months. An easy way to increase your bottom line is to cut costs. When did you last renegotiate your credit card charges? Are you getting the best deal from your wine merchant? Review your menu and check your profit margins – which are the dishes that give you the best margins? Create a special menu with these dishes to sell more. Eliminate your 3 worst-selling dishes and those with the worst margins. You will be surprised at how this regular housekeeping can affect your bottom line.
Quick Win 3: Increasing Restaurant Prices
“If your prices are 10% too low you have to do 3x the work to make the same profit. If your prices are 10% too high you can lose 43% of your business and still maintain the same profit.” – Larry Steinmatz
One of the quickest ways to increase your restaurant profits is to raise prices. Just a few dollars on several well-selling items will give you exponential growth immediately. That may sound like a frightening idea, but take a closer look at the psychology of pricing and buying behavior and you will understand why 80% of restaurant businesses undercharge for their services and products.
Except in some particular cases, most people do not make purchasing decisions on price alone. Don’t believe me? Just take a look around at the sunglasses people have on around you. I bet you see a lot of Ray Bans and Dolce Gabbana sunglasses. This just shows that there are other criteria for purchasing behavior than price. Restaurant intelligence
So whatever you do, don’t ever reduce prices, and certainly don’t start a price war. You don’t want that to be your competitive advantage because anyone and everyone can undercut you. On the contrary, seriously consider raising your prices. Don’t let fear of competition or lack of confidence stop you. If you have true differentiation, you have targeted your audience correctly and they see a perceived value in your product that they are willing to pay for, then you can charge premium prices. Actually, they will expect a premium service and will feel privileged, and you may find yourself selling even more.
In most cases you will find that dropping prices to sell more actually loses you money, while raising prices, even if you sell less, raises your margin.
Even if it seems like a difficult thing to do, test different higher price points for various offerings. Tomorrow raise your prices by 10%. You can observe not only how the price rise affects your business (you will either lose business, gain business or stay the same), but you can then look at your profit margins and adjust accordingly.