How to Survive and Thrive in Re-Opening Your Cafe or Restaurant After The Pandemic – INCREASE YOUR PROFITS TODAY!

The hospitality and retail industry has been hard hit in every province and state across North America.  These businesses in BC and in many areas are about to re-open or have this past week.  Walking into the new normal can be challenging to the bottom line, with many regional policies only allowing 50% capacity, and limited hours.  You must pivot and do whatever you can with your teams to drive profits, increase customer satisfaction and ensure your business is positioned well to navigate this ‘New Normal.’

Right product, right place, right price

Pricing your menu after the pandemic can be very tricky.  It is a definite science: too low, and your food costs will eat up your profit margin; too high, and you will have unhappy customers. However, if food costs are cutting into your profits, it is time to have another look.  Generally, you want to keep your food costs at an average 30 – 35% of the menu price, although some higher-priced items, like steaks, may run higher.  Keep in mind that food costs fluctuate pretty frequently, so you must be prepared for this and add some room into your prices to minimize the impact and drive profitability.

As you review your menu prices, remember that there is a psychology to the way people buy.  Your prices should reflect purchasing power in your area: low to middle-income neighborhoods tend to favor high-value, low-cost meals, while upscale regions are more focused on quality ingredients and food trends.

Where the menu item is on the menu, as well as the layout can also influence customer purchasing.  Placing an expensive, high-profit item next to an even more expensive, low-profit item will lead the customer to choose the former option.  This technique is known as relative placement, and it can be used all over your menu to influence customer decision-making.  This is a strategic way to increase your restaurant  or cafe profit margins.

Review Your Recipes

Now is the right time to adjust your menu without too much back-lash from customers.  Customers understand the impact the pandemic has had on many hospitality businesses and will be more understanding to some minor changes.  You must review your recipes and offerings often.  It is possible to increase profits without raising prices. For example: replacing a low-performing, high-cost meat dish with a satisfying pasta dish will certainly make a difference since pasta entrees average at just 15% food cost. Salads perform similarly well, and are on trend, although they may not be the best replacement for heartier entrees. For drinks, review your costs associated with each beverage regularly?  Matcha is very expensive and fluctuates on price throughout the year, does your profit margin still make you money and make sense?

You may also want to look at the specific ingredients in each dish.  “Expensive” doesn’t always translate to “delicious”; there are many low-cost alternatives for high-dollar foods.  For instance, salmon portions can easily be rotated out in favor of its less-expensive cousin trout.  Another example in recipes could be moving from shallots, over $3 per lb on average, to red onions which average around $1 per lb.  Also, does your team portion everything correctly?  IE. If a recipe calls for 2 ounces of sauce, are they measuring and following this exactly?   Or are they ‘eye-balling’ two ounces.  This also comes back to training and follow-up.

By regularly reviewing your menu, recipes, costs and portion sizes, you are maximizing your food costs and minimizing waste across your entire menu, which in turn drives profitability.  Now is the time to adjust your menu with only those most popular, and most profitable items.

Implement Daily Specials

Daily specials and limited time offerings are pure profit gold.  They allow your chefs to flex their creative muscles while using up any excess product you have on hand.  Also, since these are specials or features you can charge more for them than other regular entrees, without much resistance from customers.  Customers now more than every have been impacted financially and will be coming back looking for a deal.  In terms of feature or special drinks let your baristas or bartenders create a unique blend that will spark the interest of customers and hopefully have them trying something new and exciting. Price it well and it can be a huge hit for your customers (and your bottom line!)

The sky is the limit for specials, as long as the recipe is relatively simple to follow. Be cautious though, as you do not want to add a complicated dish to your kitchen, reducing efficiency and causing headaches for your chefs. Look for entrees that can be prepped ahead of time, like barbeque pulled pork.  However, do not be afraid to try out something new and exciting — if an item becomes a hit, it may just be time to add it to your regular menu!  Don’t forget the power and connection of serving something Instagram-worthy!

Upsell, Upsell, Upsell

Up-selling is one of the most effective ways to raise profits without increasing overall labor costs. It takes minimal effort on your staff’s part to prep a dessert or pour another glass of wine, but these high-yield items add up to big profits.  In a café your team must be knowledgeable about perfect pairings and offer them up in a genuine way to your customers with their favorite brew.

Ideally, your team members should be able to make suggestions and personal recommendations that feel authentic and organic. Allow servers to taste and try your menu items, so that they have the knowledge to romance these items with specific taste profiles and ingredients. When a customer asked for a recommendation you can see the genuine passion when it in fact is their favorite menu item, and this translates into trust between the customer and server, and even better, increased sales!

Teach and train your service staff to understand the profitability of various entrees and which menu items are ideal to suggest.  When you can accomplish getting your team excited about your offerings, they will up-sell with ease and increase overall sales and profit, while having fun with their customers.

Follow these suggestions, and your business will not only survive, but thrive throughout the rest of 2020, and recover nicely after the pandemic.