Restaurant operations can take a toll on yourself and your employees if it’s not properly optimized. In order to be successful, your restaurant operations must have clear goals and processes.
If you want to learn how to improve restaurant operations, then this article is for you.
What Does Restaurant Operations Mean?
Restaurant operations is the activity of managing all areas of the business. This includes inventory management, employee scheduling, reservation management, marketing management, to name a few.
It is important to note that restaurant operations are more than just food. Restaurant operators who want to know how to improve restaurant operations as a whole put a similar focus on customer service, purchasing, inventory management, and food safety.
How to Improve Restaurant Operations? 10 Tips for Managers and CEOs
Successful restaurants always look to innovate their operations. What works well the previous year might not be as successful in the succeeding years. Designing systems for efficiency will save you time and will look to add more profit into your pockets.
Here are some aspects that you can monitor in order to improve your restaurant operational efficiency.
#1 Take Informed Menu Decisions
Let’s face it, the restaurant menu is what entices a customer to try your restaurant. If the food is good, it is more likely that the customer will return to your restaurant.
One food trend that’s on the rise in 2022 is the simplification of menus. It is important that your restaurant focuses on the quality of food rather than its quantity. In addition, analyze which sales category is the most popular to your customers.
Other ways to improve your menu is to get data on which products garner the most sales. In addition, you can get the costs of all your products and determine which products yield the highest profit. EagleOwl allows users to see their top products in terms of quantity and sales figures. It also has an automated costing system that will alert you if it’s reaching the maximum cost threshold.
#2 Manage Labor Costs
Labor costs are one of the major expenses in running a restaurant. If managers want to know how to improve restaurant operations in terms of labor, they should pay close attention to data from their restaurant scheduling software and sales-related data from their restaurant management solution. Here’s how.
First, a restaurant can use its sales forecasting data to effectively schedule employees. Restaurant managers can then create schedules that match your sales to the necessary labor. Other data that managers can track is employee overtime and match it with sales forecasting to see if it’s really necessary.
Second, restaurants can track employee productivity as a percentage of sales. The most common data that managers look at are sales per labor hour and transactions per labor hour. Knowing this data can help managers decide where and when employees should be scheduled.
Lastly, it is important that your restaurant works to have a good retention rate. Have a look at the schedules of employees if they have worked enough days in a cutoff or if they work enough hours in a day. These are usually the culprits for high turnover rates of restaurants.
#3 Create a Great Guest Experience
Exceptional customer service is the most important foundation to having a great guest experience in your restaurant. Customers have certain expectations when going to a restaurant and it is important that you meet them. There are many types of restaurants and creating that great guest experience is different for each. This can be achieved with the several avenues in which the restaurants can collect data from.
First, look at the comments that your customers leave via the suggestions card. Tally the results and see which area needs the most improvement. Second, consistently look at online reviews to see how you can improve customer experience. For example, if you’ve been reading a lot of reviews saying that your dining area is very dark. It’s a sign that you should act and put more lights on your dining area. Lastly, look at offline reviews as forms of data as well. These can be reviews written in magazines or newspapers.
#4 Improve Reservations System in Your Restaurant
When restaurant managers wonder how to improve restaurant operations, reservations are no exception to discuss. Use data from both your reservations solutions and POS to help increase your repeat visitors, increase your turnover, and increase profits. The most important data points to track include
- Table turnaround time,
- Number of diners,
- Order value,
- Reservation source.
Tracking these data points will help your restaurant
- Understand the table preferences of diners,
- Evaluate table profitability,
- Forecast seating time,
- Avoid overbooking and reservation queues,
- Understand which channels are driving reservations.
Aside from table turnover and profitability metrics, restaurants should also track customer metrics as well. Learn the habits of your repeat customers and take advantage of this so you can treat them in a VIP manner.
#5 Optimize Marketing Campaigns
Restaurant competition is at an all time high. Creating marketing campaigns is integral to reaching customers – new and existing. However, your marketing campaigns must be properly optimized in order to be effective. This can be achieved with the use of data. Here are some examples below on how you can use data to help with different types of marketing campaigns.
Influencer Marketing Campaigns
Before cooperating with an influencer, you should clearly understand who you are trying to attract and whether that influencer is followed by the right group of people. For a restaurant serving healthy food, health and food bloggers would be a great fit to cooperate.
If you think that you found the right influencer, you should ask for their blog or Instagram profile stats, e.g. website visits, Instagram post reach and engagement, story views and engagement, etc. To be able to measure your campaign effectiveness, you might offer your partner a promo code so you know once you get new customers from his/her audience.
Last but not least, you should be able to measure how your campaign is performing. Use unique promo codes to measure sales that your partner is generating and understand whether your cooperation is profitable. You might partner up with 3-4 influencers in the beginning and understand who is driving the best results. Then, you should stop paying the ones who aren’t driving any sales or meeting your goals.
Social Media Marketing Campaigns
When it comes to social media ads, you will never know what works best for your case until you try. Everything starts again with defining your target audience according to their age, location, gender, pages they are liking. You will also be able to target people you are following other restaurant profiles and are interested in tasty restaurant food.
Then you should continue with launching ads on the most relevant popular social networks for restaurants, Facebook and Instagram. Increasing your ad effectiveness depends on multiple factors, including image(s), caption, text on the image, colors, etc. As you don’t know which ad version will perform better, you should start with showing 2-3 ad versions and comparing the results.
You should evaluate not only the effectiveness of each ad version but each social network as well. If your most solvent and loyal customers are originating from Instagram, then you may want to stop investing money on Facebook. Besides, there are ad optimization tools on the market that will allow you to control your budget effectively, create and manage custom audiences easily, etc.
#6 Carry Out a Data-Driven Restaurant Loyalty Program
If you think improving your loyalty program doesn’t relate to how to improve restaurant operations, think again. A successful loyalty program can help reduce marketing costs in your restaurant and increase profits.
However, loyalty programs are more than just discounts. Restaurants should create more value to loyalty and have data-driven strategies that puts the focus on the customer.
Loyalty programs can segment customer data by purchase amounts, recent purchases, and frequency of visits. With the availability of these data, it is possible to target a specific segment to strengthen their loyalty.
For example, you will be able to personalize the experience for your most profitable customers, invite them to events, offer menu items according to their past preferences, reserve tables without prepayments, etc.
It is important that the loyalty program has a customer data platform that will help create a 360 view of the customer and identify the most profitable customer segments.
#7 Accurately Forecast your Restaurant Sales
Restaurant predictive analytics in sales can help your restaurant control important aspects of operations such as inventory and labor. To be specific, an accurate sales forecast will help in deciding how much inventory to purchase for the next weeks or months.
In addition, the sales forecast will also help you schedule the number of employees needed for full operations per month. EagleOwl can help your restaurant forecast your sales accurately with an intuitive dashboard that shows overall financial health.
There are multiple ways to calculate your sales forecast. Check out which one applies best to your restaurant and use it.
Restaurant Capacity Method
This method is best used for newer restaurants. First, count the maximum number of people your restaurant can seat. Second, assume a number on the number of turnovers your tables will have during the day. Third, get the average check per transaction – you can average the selling price of all entrees, appetizers, & drinks and then add them all. Lastly, multiply the maximum seating capacity by the estimated number of table turns in a day then multiply it again to the average check to get your forecasted sales.
Historical Data Method
For restaurants who’ve been operating for more than three years, this is the method that you should be using. This data is easily obtainable through your POS. In addition, the POS can also forecast your restaurant sales using this data.
#8 Take a Data-driven Approach to Inventory Management
When restaurant managers think of how to improve restaurant operations, inventory is one of the first things, if not the first, that comes to their mind. Certain items like opened canned products or dairy have a shelf life of a few days and it will be considered waste if it’s not moved within the date of purchase to the expiry date. Spoiled and expired products are profit killers and a big headache for managers and owners. Preventing this from happening all comes down on how efficient you manage your inventory.
There are multiple tools that can help you optimize your inventory management. The most commonly used are Microsoft Excel and a restaurant management solution like EagleOwl with an inventory management feature.
So, how does inventory management help improve restaurant efficiency?
- Real-time data on stock levels and value,
- Variance reports on production, wastage, and usage,
- Reports trends on the ingredient cost of SKUs,
- Charts that show the usage trend for your restaurant’s raw materials.
Here’s a quick video on how to check the balance of SKUs and recipes, see the daily consumption, understand what items are out of stock, etc.
#9 Manage Purchases Effectively
Making informed ordering decisions is a key factor in improving restaurant operations. By having a ready ordering template on hand, you can forecast the orders that you need and you’ll avoid overstocking.
In order to be efficient in forecasting your orders, the data you’ll be needing is the raw material usage for the period when the order is needed. If you order weekly, get the usage for the last 7 days. If you order bi-monthly, get the usage for the past 14 days.
Next, get the average over that period and use it as a guide to calculate stock levels. Determine your restaurant’s minimum stock levels and reorder stock levels for raw materials. You can get this by multiplying the average daily usage by the number of days you set for these parameters.
For example, we are going to compute how many bags of brown sugar we’re going to order. First, let’s assume our restaurant is doing weekly orders. The current stock on hand is 39 bags and let’s say the goal of the restaurant is to have a 14 day stock level.
If the usage for the past 7 days is 28 bags, then that’s an average usage of 4 bags daily. The 2 week stock level will be at 56 bags of brown sugar. We subtract 56 bags (2 weeks stock level) to our stock on hand (39 bags) and get 17 bags – that is the number we need to order.
#10 Take Care of your Restaurant’s Reputation
A restaurant’s reputation can spell the difference between a busy night and an empty one. Find out what people are saying about you on restaurant review sites to further improve your operations.
It is a certainty that there will be a mix of positive and negative reviews. Make sure you prioritize replying to the negative reviews as it shows that you listen to them. Customers want to feel like what they say matters to businesses and this might potentially convert them back to your restaurant.
Improving restaurant operations management is no easy task. There must be a conscious effort on the part of management and its employees to do it.
Get started with these 10 simple steps on how to improve restaurant operations and see the results in no time.
Learn how to grow with EagleOwl. Our restaurant management system can help optimize your finances and increase your restaurant’s net profit by at least 25%. Contact us now to schedule a free demo!