Restaurant owners are always looking for ways to save money and bring in new business. My father runs the largest privately owned food distribution business in New England, and his customers frequently share tips on saving energy, such as using high-powered refrigerators and freezer-lock doors so equipment doesn’t run as hard overnight. But there’s more to running a successful restaurant than managing the cost of your utilities.
Here are five things you can do to improve your bottom line:
1. Embrace the digital age. Make sure your website is up-to-date and mobile- friendly, and that your menu is easy to find and read online. Even better, enable customers to make a reservation or order online. Consider using geo targeting, which locates potential customers based on location through their mobile phone’s GPS feature, as a way to reach people nearby and enhance your sales. Offer reward points or deals (e.g., buy 10 sandwiches and the 11th is on us) to encourage repeat business. Plenty of apps can help you do all these things, including Belly, AppSuite and The Local.
2. Hedge your costs. Do not attempt to do this without going through a trained and licensed commodities advisor. There are basically two ways you can hedge costs. The first is locking in profits by investing in futures. For example, my father sells a lot of cheese to his customers, many of whom own pizza places. If he buys futures in the milk market at current prices, as the price of milk goes up, he can make money to pay for higher-priced cheese later on. The second way is to buy a futures contract to lock in delivery. For example, if you buy a contract for 30,000 pounds of sugar at a certain price, even if the price of sugar rises, you’ll be able to purchase sugar at the lower, originally contracted price until that contract expires.
3. Make sure you are fully insured. Most business owners have life insurance, but not enough of them have disability insurance. If you unexpectedly get hurt and are unable to work, your business could come to a halt, and you can’t collect life insurance for a disabling injury. No one wants to think about something like that happening to them, but preparing for the unexpected is the smart thing to do.
4. Account for seasonality. Keep a record of sales volume by date to help you adjust for cost, savings, staffing and purchasing throughout the year. Keep in mind that changes in weather can also have a drastic effect on your business.
5. Keep better records. You can do so in many ways, but if you take my advice and embrace the digital age (see tip #1), you can use your phone or tablet to accomplish this. Mobile apps like Lettuce and ScheduleFly can help you easily improve operations and productivity, as well as create a better environment for employees. Lettuce allows you to keep a real-time product inventory and notifies you when it’s time to place your next order, which can help you avoid costly shortages. The ScheduleFly app facilitates communications between you and your employees. It makes shift scheduling and switching faster and easier, which enables you to be fully staffed and prepared.
Manny Frangiadakis grew up in the restaurant business. He is a wealth advisor and cofounder of Twelve Points Wealth Management, with offices in Concord and Boston, MA. He can be reached at 978-318-9500.