She then explained that independently owned restaurants most often hang out in the 4 to 6 percent range for profit. Most restaurants look at theirs quarterly. At Mei Mei, the entire staff digs in every four weeks. At Mei Mei, the catering line item includes traditional drop-off catering, weddings, staff-led cooking classes, and restaurant buy-outs.
Historically, Li has seen this line item trend upward over the past few years, which she says is an argument for doing more catering in In , Li actually wants to see this expenditure grow, and is now requiring staff to note what was doled out at the end of each shift.
COGS covers not only direct food purchases, but also anything that is necessary for providing the product to the guest. So included within this category are things like takeout boxes, napkins, and paper bags. Everyone makes overtime if they work more than 40 hours 1. On the health insurance front, Mei Mei contributes half the cost of health insurance for full-time staff. The benefit line item includes training and certification expenses for things like ServSafe, a FOH safety training and certificate program, as well as public transit benefits through the Perq MBTA program.
Throughout , Mei Mei had between 25 and 30 employees on staff. One important caveat when looking at staff wages is that not all of the employee wages actually fall into this bucket. Often, businesses will log salaried employees who work on administrative tasks into the overhead category rather than this direct labor section. Next year, this number will go down a bit as Mei Mei purchased its very own ice-making machine. Another surprisingly large sum?
And at Mei Mei, linens are actually pretty limited compared to fine dining establishments with tablecloths and cloth napkins in the mix. In addition, consider a strategy for responding to reviews in a polite, professional manner to stay proactive with your online reputation.
Finally, with more customers relying on social media for discovery, maintaining a proactive social media presence can help you connect with new guests and engage with current regulars. A loyalty program can be valuable to create a deeper connection with your customers.
Such a program can reward your regular customers through points or discounts, increasing sales volume and visits to your restaurant. A customer loyalty program can also help you track and understand essential data about your customers, helping drive menu item changes and informed business adjustments. Insight into your profit margin not only ensures your business is healthy day to day, but also sets up your restaurant for long-term success.
If you would like to track your restaurant profit margin using tools like inventory management or smart scheduling , consider an all-in-one restaurant management system, now with the new Smart Ops Release.
What is the Average Profit Margin for a Restaurant? By Gabe Flores - Restaurant February 25, This field is for validation purposes and should be left unchanged.
What is the Average Restaurant Profit Margin? Gross Profit Margin Your gross profit margin is what is left over from your revenue earned after deducting the cost of goods sold CoGS , the cost of ingredients for your menu items.
Net Profit Margin Your net profit margin is based on your net income, which is your total revenue minus your operating expenses your CoGS and other operating costs like payroll, taxes, maintenance, and rent. Average Profit Margins by Restaurant Type Full-Service Restaurants A full-service restaurant typically includes table service and more involved customer service experiences, spanning fine dining to a sit-down dinner.
Fast Casual Restaurants Fast casual restaurants, also known as fast food or quick service restaurants, involve ordering at a counter or doing some level of self-service. Catering Services Catering businesses range in size and business model, but generally, although CoGS may be the same between catering and FSR, catering can operate with much lower overhead costs.
How to Improve Average Profit Margin Understand and Monitor Your Metrics Regularly Understanding your margins is the first step to improving them, and certain metrics, tracked through your restaurant accounting software , are key to getting the full picture of your average profit margin.
For restaurant expenses, restaurant owners focus on three primary key metrics: Cost of Goods Cost of goods sold CoGS refers to the total cost of the inventory used to create food and beverage items during a specific period of time.
Overhead Overhead costs include your directly controllable expenses, like supplies, repairs, and marketing, as well as your non-controllable fixed operating expenses, such as rent, utilities, salaries, and insurance.
This is another fine balance between maintaining a cost and keeping your staff happy and able to live on their wages. It can be done if you are using software to monitor shifts, create more efficient scheduling, and prevent early clock-ins. There is also something to be said for adding benefits to keep staff happy and loyal. Food waste and internal theft are unfortunate but very real problems in the restaurant industry.
Make sure you are communicating with your staff and implementing their feedback where possible to decrease turnover and increase staff loyalty. Support Login. Get your restaurant set up for success with Upserve! Share Pin 3. Step One Tell us about yourself.
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