Why is my restaurant losing revenue



One of the toughest questions to answer is why is my restaurant revenue doing so badly? there is a number of reasons why;

  1. Restaurant location – Competition is a major factor; how many other restaurants are close to your location? How many of those restaurants are similar to your restaurant and menu. How unique is your restaurant compared to the other restaurants located within a 5-mile radius?
  2. Restaurant demographic – Are you focusing on the types of people in and around your neighborhood? For example; a family restaurant; do you cater to children? Did you know in some insistences children dictate where the family eats? What about sports bars? Do you cater to the younger population? Is your restaurant located near a college Better yet is your restaurant near a major sports complex?
  3. Restaurant accessibility – Is your restaurant located near a major highway with easy access to your restaurant? How large is your restaurant’s parking lot? remember you need an adequate number of spaces versus the capacity of the restaurant. if the parking lot is too small there is a good chance those possible guests may go to your competition and therefore you will lose major revenue.
  4. Training restaurant management and crew – Restaurant training should be your top priority; you cannot make an impact of great service with inadequate service. Your management staff oversees the entire restaurant crew and therefore is very important the managers are consistent with day-to-day operations. When hiring employees is very important to screen your applicants. Do the applicants have prior experience? The other flip side of the coin is just because the applicant does not have experience does not mean they might be a great fit, example; in their past employment the applicant may have been an exemplary employee, the learning aspect should be greater with that particular applicant.
  5. Systems inconsistency and execution –You should make a huge impact in this area if your employees are familiar with your rules and policies and procedures. Most restaurant systems are developed universally. Your managers should know the policies and procedures like the back of their hand and they should be held to a higher standard. You expect management to possess the owner’s mentality. You cannot hold the crew responsible if managers are inconsistent from shift to shift…A compliment goes a long way. Also, management should oversee the crew spotting infractions and correct them on the go. Another area to be concerned about is execution. How consistent are the cooks and servers? do they know your menu inside and out by memory? What about time and temperature and plating. hot food hot and cold food cold and the timing of food.
  6. Inventory inconsistency (food cost) – Are inventories done consistently? Food cost percentage is between 28% to 35%. Fast food restaurants have a food cost at the lower end of the national average and high-end restaurants will have a food cost between 30% to 35% or higher and this is associated with a higher cost of menu items. If your inventory is within a good food cost you should do inventories monthly. On the other hand, if your food cost is too high you should think about doing inventory weekly, it’s a pain in the butt to do inventory weekly. Put it this way it’s better to catch a bad food cost quickly than waiting for a long period of time and losing more revenue, the longer you wait the more cash you lose. if your food cost is higher than normal you should do your inventory again or look for inconsistencies. Also, when conducting the food cost counting it’s better to have two sets of eyes, meaning one counter and one recorder you will have a more accurate count doing this way Employee theft is concerning, are you losing large ticket items. Are managers present around high theft areas? Is your back door looked preventing possible theft? Do you have a policy about having bags, backpacks, and women’s purses near high-impact areas such, as, in the kitchen? You should have a designated area for those particular items away from those areas where food can be concealed. 70% or more is directly related to high food costs, whether it is employee theft or poor employee training.
  7. Labor cost – A healthy percentage of labor costs guideline varies by industry and your particular restaurant’s business model. Most restaurants aim for labor cost percentage somewhere between 25%-35% of sales, but that goal may vary by restaurant industry segment:
  1. 25%: quick-service restaurants with less specialized labor and faster customer transactions
  2. 25-30%: casual dining, depending on the menu and methods of service
  3. 30-35%: fine dining, depending on in-house food production and service components

While these industry benchmarks can be helpful to indicate your performance in the industry, every restaurant has different challenges, strengths, and sticking points.

8. Use of restaurant forms and checklist These resources are the best option to get your restaurant organized and ready for the rush times. There are kitchen forms, server forms, manager forms, and more. Clearly, these resources can help with your bottom line and customer service.

9. Menu – The menu items and layout are very important when it comes to your guest, you need to create your menu based on the type of restaurant and location and what your guest is hungry for, for example if you were a Mexican restaurant then you would sell Mexican food.  The menu layout needs to be eye-catching and appealing.

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