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Unlock the Efficiencies of Chain Restaurants
Independent restaurants possess unique personalities, local connections and some of the best food in the world, but profitability is a challenge, especially compared to the well-oiled machines of restaurant chains.
A recent report by restaurant strategy firm Aaron Allen & Associates put the average profit margin of an independent restaurant at 7%, compared with McDonald’s at nearly 50%. Restaurant Brands International, the parent of Burger King, Popeyes, Tim Hortons and Firehouse Subs, comes in at 35%.
Increasingly, the differentiating factors lie not so much in volume pricing but in technology. With deep pockets, chains can afford to leverage all that tech has to offer. Not so much with mom-and-pops, but that doesn't mean independents can't tap into the big guys’ playbooks.
Streamline Your Menu
Brendan Mullan, corporate chef of 20-unit Iron Hill Brewery & Restaurant, recently cut his restaurants’
menus in half – from 87 to 40 items. He eliminated items that didn't sell well, plus those that required too much finesse, leading to uneven execution or slower kitchen operations. He also paid attention to the sales mix, focusing on menu items that moved quickly and thus featured fresher ingredients.
Streamlining also allows kitchen staff to master a limited number of dishes, improving consistency and efficiency.
A more focused menu can also make it easier for guests to order, preventing the quandary of too many choices. For example, chefs say a choice of four pasta dishes is plenty; concentrate on those, and the result will likely be better food and faster table turns.
Test Your Food
Chains often spend large sums on multi-stage menu testing, including focus groups and limited rollouts. For example, Matt Burton, the corporate chef of Dickey's Barbecue Pit, tests new items in two company-owned restaurants and then expands to 10 additional locations, including high-volume airport units, to measure performance in fast-paced environments.
That's not practical for independent operators, but small-scale testing can work. Workshop menu items as family meals, offer as a private tasting event open only to regulars to make it exclusive and then sell as specials, tweaking every step of the way. Pay attention to the real-world food cost, not the theoretical one, and see if they gum up kitchen operations. Also consider other factors: Do they result in a better bottom line or are they cannibalizing more profitable existing items? Do guests order them more than once? Do they finish their meals?
Looking closely at how customers as well as cooks and servers respond to new items will help evolve the menu logically.
Additionally, bring staff into the development process. Offer bonuses to employees whose dishes make it onto the menu. Front-of-house staff can also offer additional data by providing feedback on customer reactions, helping them feel like a valued and appreciated part of the development process.
Cross-Utilize Ingredients for Maximum Efficiency
Burton uses the trim at Dickey's to make chili, turning potential food waste into a profitable item he added to his core menu. Similarly, Mullan of lron Hill sources high-quality burrata for various preparations, and he uses the same vodka sauce for different pasta and eggplant dishes. Cross-utilization also reduces the risk of spoilage and improves profitability.
Leverage Supplier and Distributor Relationships
Distributors have chefs and specialists available to support research and development with test kitchen visits, as well as operations consultants who can offer insights on issues that may be affecting profitability, and they partner with technology companies to offer discounted services to their customers. This means that mom-and-pops can receive competitive pricing on tools that the chains use but may have previously been out of reach.
Use Sales and Social Data to Your Advantage
Chains spend a fortune analyzing their spending, as well as their standing in the world, through social media and point-of-sale data and menu-costing software – actions that independents can take. Pay attention to sales reports, identify the most profitable items and encourage servers to market them. Are there loss leaders on the menu? Consider raising prices or finding more profitable alternatives.
Pay attention to online reviews. Negative comments might hurt, but if they're consistent, they can help pinpoint problems. Consider software and platforms that use machine learning and artificial intelligence for targeting better labor costs and overall efficiency.
Work With Other Restaurateurs
Chains and multi-concept restaurant operators have the purchasing power to negotiate bulk discounts, which independents can do with fellow small businesses.
Neighbors are indeed competitors, but they're also colleagues and are often in the same boat. Consider working together and establishing purchasing cooperatives to increase purchasing power. Some cooperatives already exist across the country, but if one doesn't, consider forming one or contact the local restaurant association to help coordinate such an organization.