Simple steps for success in Quick-Service Restaurants
- coolrahul2881
- Aug 29, 2024
- 3 min read
Updated: Mar 26
If you own a Quick Service Restaurant (QSR), chances are that you may have done a deep dive into your accounts (Netsuite, QuickBooks), and the numbers may have told you an important story. Let's say these are your numbers: profit margins at 5%, food costs at 39%, payroll at 42%, and overhead at 14% (sample scenario taken from reddit*). These figures are common in the industry, but with some fine-tuning, you can improve your bottom line without sacrificing the quality and experience your customers love.
Here’s how to get your profit margins to a healthier level:
1. How to tackle food costs without compromising portions?
Portions are a signature element, and changing them might feel like a risky move. But there are other ways to bring down your food costs which are high at 39% (industry norm is between 25%-30%) without touching portion sizes:
Supplier Negotiations: Regularly review your suppliers and negotiate better deals or consider bulk purchasing to get discounts.
Menu Engineering: Highlight high-margin items and consider removing low-margin or less popular dishes.
Waste Reduction: Focus on reducing waste by tightening inventory control and ensuring proper food storage and preparation techniques.
2. How to maintain payroll efficiency?
Payroll costs could be a significant factor in your financials. At 42%, they’re higher than the industry norm that is between 25%-35%, but there are ways to trim this without cutting jobs:
Smart Scheduling: Use scheduling software to align staffing levels with peak times, minimizing overstaffing during slower periods.
Performance Incentives: Introduce performance-based incentives to boost productivity and morale, ensuring you get the most out of every labor hour.
3. How to adjust your pricing strategy?
Even if your prices are consistent with competitors, a slight price adjustment might be necessary to reflect the value you’re offering. You might be able to:
Incremental Price Increases: Small, gradual increases can often go unnoticed by customers but have a significant impact on margins.
Bundle Deals: Offer combo meals or bundled deals at a slightly higher price point, giving customers more perceived value while increasing your average check size.
4. How to reduce overhead without cutting corners?
Your overhead costs are at 14%, which is fairly standard. However, small savings can add up:
Energy Efficiency: Invest in energy-efficient equipment and practices to lower utility costs over time.
Technology: Leverage technology for inventory management, payroll, and scheduling to reduce administrative costs and errors.
Reevaluate Subscriptions and Services: Periodically audit your subscriptions and services to ensure you’re not paying for anything unnecessary.
5. How to focus on customer retention?
Customer loyalty is key to maintaining steady revenue:
Loyalty Programs: Consider implementing a loyalty program to encourage repeat business.
Feedback Loops: Actively seek customer feedback and act on it to improve the dining experience.
Community Engagement: Continue to build strong relationships within your community to drive local business.
To calculate pricing of your menu item for a delivery app, check out our delivery app pricing calculator. Your restaurant may already be a success story with many years under your belt but by making these small yet impactful adjustments, you can boost your profit margins while maintaining the quality and customer experience that are your trademarks. Every decision you make now can compound over time, turning a 5% margin into something much healthier. Keep fine-tuning, stay focused, and your quick-service concept will continue to flourish for years to come.
*reddit link
DISCLAIMER: This information is provided for general informational purposes only, and publication does not constitute an endorsement. Cactus does not warrant the accuracy or completeness of any information, text, graphics, links, or other items contained within this content. Cactus does not guarantee you will achieve any specific results if you follow any advice herein. It may be advisable for you to consult with a professional such as a lawyer, accountant, or business advisor for advice specific to your situation.
