Small Business Ideas: Starting a Profitable Restaurant

by Danielle Bloom

2 min read

Margins at restaurants tend to be slim, with the average coming in at just 4.2% in 2016. When you own a restaurant, you’re dealing with perishable inventory and a large amount of competition, no matter who your target market is. You need to provide an excellent dining experience for your customers consistently, or else they may not come back and could leave a bad review that drives away business. While there’s no shortage of challenges to owning a restaurant, there are several ways you can make yours more profitable.

Limit Your Menu Options

The prix-fixe menu has been common in Europe for many years and has also gained popularity in North America. If you want to leave your customers some choice in what they eat, you can simply cut down on your menu and only provide a small selection of items.By offering a limited menu, you can purchase fewer ingredients and reduce your restaurant’s waste. Your chefs can focus on a few specific dishes instead of a huge selection of entrees, which results in higher quality for each dish.

Focus on Drinks

Alcoholic beverages have far higher profit margins than food, which is why it’s surprising how many restaurants overlook ways they can boost drink orders. Try looking up unique mixed drink recipes online or bringing in a mixologist to train your bartenders on making a few specialty cocktails. Even if customers aren’t planning to drink when they come in, they may change their minds when they see a drink they’ve never heard of on the menu. You can offer completely original drinks that your bartender created, or put a new twist on the classics. Make sure your servers are promoting your best drink options so customers know what’s available.

Diversify Your Business

If the only way your restaurant makes money is when people sit down and eat there, then you may be missing out on revenue opportunities. Diversifying what your restaurant offers can bring in more money without requiring much of a financial commitment. You could add a carry-out service for customers who’d rather eat your food at home. This also allows you to sell more food without having more customers in your dining area. Another option is selling collectible items related to your restaurant, such as glassware or T-shirts. Look at the Hard Rock Cafe for an example of how profitable the right restaurant merchandise can be.Considering that the restaurant industry has some of the narrowest profit margins, any edge that you can find helps. Focusing on alcoholic beverages and diversifying your restaurant’s revenue streams both have low levels of risk and high potential rewards, making them a must for any restaurant. Depending on your target market, you may find that reducing menu options or even going the prix-fixe route could work well for your restaurant.

References & Resources

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