By effective management, we mean balancing all the different tasks and operations that go on in the running of a restaurant. From calculating food costs and tracking inventory, to managing staff and customer service, there are many different aspects of restaurant management.
Here are some ways in which you can effectively manage your restaurant business and maximize your profits.
1. Calculate Food Costs For Your Menu Items
Good restaurant management is done by keeping a check on your costs at all stages of operation. This means from ordering your inventory to calculating your food costs, you need to be careful about every little detail.
Your restaurant menu helps in branding your restaurant and serving your customers. The layout of your menu, the type of food you sell, and the pricing – all work together to give your customers an impression about your restaurant.
Since your menu is so important to your business, you need to take the time to set your pricing for each food item. Now if you set the prices too high, you may start losing customers depending on the niche you serve, and if you set them too low, your restaurant will not be sustainable and you will start losing your food quality. This is because inventory and other expenses are rising, and if you are not regularly updating your prices, you will lose out.
The first step you need to take is to plan out your standard menu. Keep in mind your profits when doing this. It is best that you sit together with your restaurant manager and chef so that you have an overall picture of how each item on your menu should be priced.
When planning you should be able to decide what kinds of food you are going to offer your customers, create an ingredient list for each of these items individually, calculate the average cost for each item, create recipes and standard procedures for each item, and finally price each item.
Pricing of each item on your menu must be done by factoring in both ingredient costs as well as preparation times. Remember to include ingredients like salt and spices, even though they are used in very tiny amounts. For more help on how to determine food costs, you can read this article.
Having daily specials will also help maximize your profits. If you happen to come across a sale for a particular main ingredient like fish or turkey, buy a little more than you need for regular items on your menu. You can then plan out a few special menu items for that day so that it is refreshing for your repeat customers, and you make a few extra sales while finishing up your stock before it goes bad.
2. Keep a Tab on Your Food And Operating Costs
If you want your restaurant to succeed, you will need to keep an eye on your food costs and your operating costs. It is important to regularly review your actual food costs so that you can have a clear picture of how much you are actually spending per dish in the long term.
Your sales do not paint the right picture for your profits. Even if your restaurant is busy most days of the week, you may still have trouble increasing your profits if you don’t constantly update your menu prices according to your fluctuating costs.
By reviewing your costs on a regular basis, you will be able to figure out whether you are producing excess waste as well.
You can easily set up a system that helps you track sales, restaurant inventory, and food costs. This can be done either manually or through restaurant management software. A restaurant software makes all your calculations easier, more accurate, ad quicker saving you time and money lost due to human error.
It also gives you real-time information, along with details about each item so that you can have a better idea of all the costs involved.
In addition to food costs, restaurant management should also calculate overhead costs and cut down costs wherever possible. These costs could be staff costs, property costs, maintenance costs, insurance, equipment and upgrade costs, utilities like water, gas, and electricity, food permits and other relevant licenses, marketing, and promotional costs, taxes, etc.
3. Carefully Manage Your Inventory
It is crucial that you have a good inventory management system in place while running your restaurant. It can help you track inventory usage and reduce restaurant food wastage drastically. It also allows you to have an idea about how many meals you can make of a particular type with the ingredients you have in stock.
Be specific about each ingredient and include details about type, variety, quantity, etc. This way you always know exactly what you have in stock without having to keep checking your inventory manually.
If you have a small restaurant, you can easily make inventory lists manually, but bigger establishments would save a lot of time and energy with a restaurant inventory management system.
Along with knowing how much inventory you need in a day or in a week, an inventory list also helps you cut down on excess orders that can potentially go to waste. This is especially important when you are ordering perishable items that have a very short shelf life.
Use the FIFO method when dealing with perishables like poultry, fish, meat, milk, bread, vegetables, and fruit.
Keep an eye on trends you may be noticing every month so that you can either order more of a certain ingredient or cut down on the quantity if it is getting wasted regularly.
If you have integrated software, you will be able to get real-time updates on how much stock to order depending upon how many meals are being purchased by customers. This will ensure that you never run out of stock when you really need it.
4. Create Standard Recipes And Operating Procedures
When you have crystal clear guidelines and processes that help your staff do everyday activities, it streamlines your restaurant operation and takes away any guesswork. This will help your staff become more efficient and learn new tasks very quickly.
Having standard recipes and restaurant standard operational procedures stored on a restaurant management software will allow your staff to quickly access new procedures and do them flawlessly. It helps in the growth and development of your staff members and keeps your customers happy overall.
Have an open and closing procedure that includes tasks such as turning on or off lights and equipment, checking inventory, storing food, prepping food ingredients, and also serving procedures.
You can also have procedures for waiting tables, cleaning up tables after customers leave, issuing checks to customers, and sanitizing and tidying areas.
5. Train and Manage Your Staff Effectively
A very important aspect of your restaurant business is your staff. The biggest challenge most restaurant owners face is the training and retention of staff members.
Most of the common issues regarding staff retention are due to bad management, improper training for the staff, and favoritism and unprofessionalism. It is therefore very important that you have good onboarding and training for all your new staff members. You need to also have regular meetings and trainings for the old staff as well to keep them up to date with all the happenings at the restaurant.
You can create a staff training manual with all the standard operating procedures as discussed in the previous section. You can use checklists to also train your staff.
Allow the senior members of your staff to train the newer ones so that they can pass on all the knowledge and tips they have learned while on the job. This will help you save time, and also your new joiners will get the first-hand experience of how to work at the restaurant from those who have been doing it for some time.
It takes many different moving parts to successfully run a restaurant business. We hope you found this guide useful as we covered all the major topics like pricing your menus, calculating food costs, managing your inventory, creating standard protocols, and training and managing your staff members.
Having these set procedures in place will help you deal with all the variables that are part of managing a restaurant, and help you manage and train your staff effectively. This will ultimately lead to happier customers who love to keep coming back to your restaurant.
It is true that in smaller restaurants, all these operations can be easily handled manually. But when you run a bigger establishment, it can be very convenient and time-saving if you could automate most processes with restaurant management software.
Saving time will eventually help you in the long run and allow you to better streamline your processes and increase profits, all while satisfying every single customer that enters your restaurant.