Increasing Restaurant Profit Margins During COVID-19

It’s no secret that COVID-19 has cost the restaurant industry millions over the last 6 months that this virus has plagued the globe. As a result, restaurant owners have been on the hunt for ways to strategically reduce overhead costs while managing to turn a profit during this seemingly never-ending pandemic. And yet, restaurant profit margins during COVID-19 are looking grim. With the second wave of COVID well on it’s way as we enter flu-season, how can food-businesses overcome this problem? Well chances are, if you’re reading this, you’re probably one of these food-businesses. Never fear, we’ve got real solutions for you that can result in a revenue increase (or at least sustainment) as we weather phase two of the pandemic.

Food Waste: A Billion-Dollar Problem

As you very well know, one of the greatest costs that a restaurant can incur comes in the form of food waste. Whether it’s a menu item that didn’t sell well or a dip in orders for the month, food waste can cost your business well over 6 figures per year. Matter of fact, according to foodprint.org:

US restaurants generate an estimated 22 to 33 billion pounds of food waste each year. Institutions — including schools, hotels and hospitals — generate an additional 7 to 11 billion pounds per year.  Approximately 4 to 10 percent of food purchased by restaurants is wasted before reaching the consumer. Drivers of food waste at restaurants include oversized portions, inflexibility of chain store management and extensive menu choices. According to the Cornell University Food and Brand Lab, on average, diners leave 17 percent of their meals uneaten and 55 percent of edible leftovers are left at the restaurant.

Take a moment and think about your restaurant menu. Do you know the cost of each menu item? What are your processes for re-ordering through your food supplier(s)? What if there was a way to reduce your costs just by what is presented to the customer, both in menu-listing and on the plate? We are happy to inform you, there absolutely is.

increase your restaurant's profit margins during covid-19

The second wave of COVID-19 doesn’t have to result in devastating loss of revenue. Your menu is the key to your success.

Simplify Your Menu

If you’re a local “mom & pop” restaurant that is known for menu diversity (aka the high number of options you offer on your menu) , chances are you’ve probably taken a big hit over the last 6 months or so. This is because the more diverse your menu is, the more food must be on hand to deliver on each of those menu items. It’s also highly likely that restaurants that specialize in one dish that can be served several different ways (think pizza parlor, burger joints and hot-dog stands) have been able to weather the storm a bit better. The reason being is simple: the simplicity of the menu and the ability to make multiple dishes using the same ingredients saves money in the long-run.

This being said, the first solution to reducing your food costs is to simplify your menu. Reducing the amount of menu offerings will allow you to have a better handle on ordering month by month. If you have been in business for sometime, it is likely that you are very aware of your best-sellers on your menu. If you are a 24-hour restaurant that serves breakfast, lunch and dinner, you know that each dining category has about 10 recipes that sell well while the others aren’t ordered as often.

By taking inventory of the individual menu items and running reports on how frequently they are ordered, you can begin to get an idea of what a simpler menu could look like while also feeling confident that you are offering your customers options they love.

Maximize Your Ingredients

Another way that your can increase your restaurants profit margins during COVID-19 is by understanding the power of your ingredients. Now that you’ve narrowed down your customer favorites, you can take a look at the ingredient similarities between each category. When you look at your menu under this type of microscope, it is likely that you’ll begin to see patterns that make you scratch your head. Why do we use vidalia and white onions when they’re nearly interchangeable? Why do we use 5 different types of rice? Can we switch a recipe or two so that we only need to order 2 types of rice? Will our customers even notice? Why do we use 3 types of peppers in our chili? Are we able to reduce to 1 or 2?

Asking yourself these questions will allow you to re-think your recipes in a way that won’t impact your flavor but will most likely increase your restaurant’s profit margins. Instead of ordering multiple types of similar ingredients, paring down to 1 or 2 options will allow you to save money on your orders with your suppliers. And the beauty of buying in bulk is that ingredients become cheaper based on their volume. Small orders of random ingredients end up creating higher costs. If you lessen the ingredients that you need on hand and increase the volume of your bulk orders, there’s money to be saved all around.

Data Collection Doesn’t Have to Be Complicated

This strategic way of thinking can lead to a more stable outcome for your food business during COVID-19. And the beauty of it all? It truly doesn’t have to be complicated. If you want to simplify your menu and discover what ingredients you can do away with, this data is all available to you through your MenuCalc account in combination with MealBuilder’s analytics tool. Did you really think we were going to make you do all those reports by hand? Never.

With the MealBuilder smart-menu tools, you can easily take inventory of your menu recipes and cross reference them to determine ingredient frequency, making it easier for your to decide what menu items to keep and what can be done away with (even just temporarily) so your restaurant profit margins can increase during the second wave of COVID-19. If you’re interested in the solution, we’re more than happy to lead the way. Check out MealBuilder today and give us a call.  We’re positive that we can help you make the most out of your simplified menu and find pockets of revenue that would have otherwise ended up a statistic in this year’s food waste count.

Interested in increasing your restaurant profit margins during COVID-19? Contact us. You’ll be glad you did. MenuCalc is the leading nutrition analysis platform on the market to date. Unleash the power of your menu with MenuCalc. 

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