The Average Restaurant Profit Margin in Malaysia: Are You Profitable Enough?
Have you ever wondered how much money you can make from running a restaurant in Malaysia? It’s a question that many restaurant owners, present and aspiring, have asked themselves. With the food industry being so competitive, the success of a restaurant boils down to its profit margin.
There’s no denying that there are high costs associated with running a restaurant in Malaysia. But how do you know if your business is profitable enough? After all, the ultimate goal is to hit – and exceed – that average profit margin of restaurants across the country. In this article, we will cover the average restaurant profit margin in Malaysia and offer some tips on how to reach it.
Analysing the Average Net Profit for Restaurants in Malaysia
As a restaurant owner, chances are you're familiar with the phrase "the restaurant industry is a volatile one" all too well. You work hard to ensure your business stays ahead financially, but what if you're not achieving the average profit margin in Malaysia?
That's why it's important to take a deep dive into how profitable you are compared to the rest of the market. By understanding the average net profit for restaurants in Malaysia, you can gauge how profitable your own business is so that you can figure out what measures you need to take to optimise it.
Take a look at some of the data: according to recent statistics, the average restaurant profit margin in Malaysia ranges from 5%-8%. When compared with other sectors such as retail and hospitality, which have much lower net profit margins (2%-3%), it’s clear that the restaurant industry is more lucrative than most.
Knowing these figures will help you better understand why certain decisions benefit your restaurant’s success and profitability more than others. With this knowledge, you can ensure that your business stays ahead financially and continues to be profitable in Malaysia's competitive restaurant industry.
How to determine the profitability of your restaurant business?
Do you ever wonder how profitable your restaurant business is? Knowing your restaurant's profit margin is key to understanding the financial health of your business.
There is no exact formula to measure profitability, but there are some key metrics to guide you.
The two most important are Gross Profit Margin and Net Profit Margin.
Gross Profit Margin measures how much of each sales dollar remains after paying the cost of goods sold.
Net Profit Margin measures the percentage of each dollar that turns into net profit after deducting all costs and expenses, including taxes.
You can also use a break-even analysis to determine when your restaurant’s total sales will cover all the costs associated with running it—meaning you would break even and begin making a profit.
To do this, you'll need to calculate the total fixed costs that occur regardless of sales volume, such as rent and staff salaries, as well as any variable costs associated with food or drink items sold per unit. Once you have those figures, divide them into a break-even point in terms of sales figures, and you’ll have an estimate for when your restaurant will break even and start turning a profit.
Main factors of running a restaurant business in Malaysia?
When it comes to running a restaurant business in Malaysia, there are some main factors you should consider.
Rent and Utilities
When it comes to a restaurant business, you need to factor in the cost of rent and utilities. In Malaysia, the average rent for commercial per square foot is RM32.50 (USD7.67). Depending on your location and the size of your restaurant, your rent may be higher or lower than the average. Moreover, your monthly utilities such as electricity bill and water bill could be another cost that you need to bear in mind.
Staffing Cost
Having reliable staff is vital for restaurant businesses. The cost of hiring employees includes basic salary, bonuses and allowances such as overtime pay or travel allowances. The salary increases with the experience and qualifications of your staff, therefore, do take this into account when hiring them for your restaurant business.
Kitchen Supplies Cost
The kitchen supplies cost could be one of the biggest expenditure streams for restaurant businesses; from food ingredients to cooking requirements such as kitchen utensils or tableware.
To ensure value for money spent on kitchen supplies, you should compare prices from different suppliers and find out which supplier offers the best product at the lowest price with quality assured.
Strategies to Increase Your Restaurant Profit Margin
In Malaysia, restaurant owners are always looking for ways to increase their profits. But have you considered a few strategies to boost your restaurant's profit margin? With Food Market Hub, you can easily implement these strategies and start seeing results immediately.
Get Full Control of Your Ingredient Prices
Gone are the days of blindly believing in the prices given by suppliers. With Food Market Hub’s intelligent supplier comparison feature, you can get the best prices for your ingredients – whether it’s from local or international suppliers. You can even find out how much to order and produce for each outlet with our AI-powered forecast feature. This way, you will never need to over-order or waste ingredients again.
Monitor Your Costs Better
Food Market Hub provides insights on your cost structure, like Cost of Goods Sold (COGS), purchase history, and sales forecast reports. From here, you can easily identify exactly which area is contributing to most of your costs – so that you can make changes accordingly. Plus, with its granular control over user access levels, you’ll be able to ensure that each outlet is following strict operating procedures and prevent any wastage throughout your business network.
These are just a few simple strategies that you can use to help increase your restaurant profit margin in Malaysia – with Food Market Hub's software features; Orders, Inventory and Reports!
Conclusion
So as restaurant owners, it is crucial to analyse your profit margins and assess whether you are achieving the average profit margins in Malaysia. It is important to identify areas in your business that you can improve to optimise your restaurant’s profits and achieve the average profit margin in Malaysia.
The good news is that with Food Market Hub, you have the best tools available to increase your profits. With the power of technology, Food Market Hub can help you have full control of your ingredients price, identify wastage and eliminate hidden expenses – save more than 15% in monthly cost.
Start optimising your restaurant profits now with Food Market Hub and get ahead in the restaurant business!
