Why Your Restaurant is Losing Money (and what to do about it)

If the profits from your restaurant are moving in the wrong direction (you guessed it, they’re going down, not up) several factors are probably at play. Perhaps some of the reasons your business is losing money are due to factors totally out of your control; for example, severe weather or city construction right outside the restaurant’s entrance.

If you’re still unclear about why your revenues aren’t hitting the mark, try assessing the “lowest hanging fruit” variables to identify simple ways you can improve:

1. Cost of labor vs sales costs 

Simply being unaware of key numbers can lead to profit loss. It’s possible you’re paying way too much for staff compared to your sales. By using a digital time clock, you can see real-time labor costs and access labor vs. sales reports. This way, you can better manage your employees to avoid costly overstaffing.

2. Waiting time

 It’s great that you have so much demand for your product that hungry people are lining up to get their share. The downside is that these long wait time are affecting client satisfaction, and is a real deterrent to repeat business. When people get fed up of waiting and walk away, you lose sales. Consider cutting down on wait times with devices like Koomi Rover to take orders while people wait in line and a Mobile Ordering App (Koomi+) which lets people enter orders themselves (cutting down on time and energy for your staff).

3. Poor kitchen management

Workflow at the back-of-house is crucial for preparing orders efficiently. Remember: time is money. It’s not uncommon for kitchen staff to waste precious time due to confusion about what items need to be prepared in what order. For better workflow, use a Kitchen Display System which is synced with your Point of Sale. It helps staff manage prep work as orders come in.

4. Menu optimization

Too many menu items can result in customer confusion, or taking too long to order. Consumers in 2019 typically expect restaurants to have a strong brand identity – meaning they specialize in a few items (and item categories) that they do very well. Consider identifying your best sellers and building a smaller menu based on what you do best, rather than offering hundreds of choices. This can help you save money when it comes to ordering ingredients.

5. Lack of online presence

You don’t need an elaborate website with all the bells and whistles, but if your online activity isn’t on point, you could be missing out big time. Make sure your business is registered on Google and is consistently updated with the phone number and opening hours. Social media is key, and platforms like Instagram are a must. Rather than take photos with your smartphone here and there, periodically hire a photographer to create a bank of high-quality, on-brand photos for you to post.

You can also extend your reach online with a dedicated Mobile Ordering App. Rather than lose money to a third-party app that doesn’t reflect your brand, you can consider launching your own take out app. Make sure the app syncs with your POS so that customers can easily place orders and pay over Mobile.

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