Improving profit by two points in a quarter

Improving profit in a restaurant rarely comes from one big decision. It comes from many small ones, each moving a cost or a sale by a fraction, which together add up to something meaningful. Two percentage points of profit, the difference between a margin of four per cent and six, can change whether a venue can afford to refresh its dining room, give its team a pay rise or survive a quiet winter. Yet two points is rarely found in one place.

Most attempts to improve profit start with cost cutting: a cheaper supplier, fewer staff, smaller portions. Some of that helps. Much of it backfires, because guests notice smaller portions, service suffers with fewer staff, and a cheaper ingredient changes a dish people came for. The venue saves a little and loses more in returning guests.

This guide sets out a ninety day plan for improving profit by two points in a quarter, by moving several things a little rather than one thing a lot. It works through food cost, labour, menu mix and engineering, pricing, waste and operating costs, with a measure for each, and it uses prime cost and profit per cover to track progress. The figures are illustrative; the plan is a method you can adapt.

Restaurant margins are thin, so small changes have large effects. On sales of 1,000,000 a year, two points of margin is 20,000 of extra profit. If the venue's margin was four per cent, that is a rise of half. For many venues, two points is the difference between struggling and being able to invest.

It also matters because two points is achievable. Asking a venue to improve profit by ten points in a quarter is asking for a transformation. Asking for two points, found a fraction at a time across several areas, is asking for disciplined management, which most venues can provide.

Two points rarely comes from a single line. Food and drink cost might move by half a point, labour by half a point, menu mix and pricing by half a point, and waste and operating costs by another half. Each move is small enough not to change what guests experience, and together they reach the target.

This approach has another advantage: it spreads the effort. No single member of the team carries the whole burden, and no single change is large enough to cause problems.

The general idea of profit margin is simple; improving it is mostly a matter of many small, deliberate choices.

Before changing anything, measure where you are. For the last few months, calculate sales, food and drink cost, labour cost, prime cost, operating costs and profit, each as a percentage of sales. Note covers and profit per cover: the profit the venue makes, on average, for each guest it serves.

Choose the measures you will track weekly during the quarter: prime cost, food and drink cost percentage, labour cost percentage, spend per cover and covers. Write the baseline down. Without it, the quarter's progress cannot be judged.

Our guide to prime cost, the one number to watch weekly covers the weekly calculation.

Profit per cover is a useful way to think about improving profit. It is the profit the venue makes per guest: total profit divided by covers. It combines how much each guest spends with how much it costs to serve them.

It can rise in two ways: each guest spends a little more, or each guest costs a little less to serve. Both are possible without changing the guest's experience for the worse. A guest who adds a side or a dessert they enjoy, or whose meal is prepared with less waste, contributes more profit without anyone feeling short-changed.

Watch profit per cover alongside the percentages, because it keeps the focus on guests rather than only on costs.

The first month focuses on food and drink cost, aiming for around half a point. Start with the largest and most expensive items. Check supplier prices against alternatives for the same quality, and ask current suppliers about better terms. Check portion sizes against recipes, especially for proteins and garnishes. Check that stock is counted accurately and that deliveries are checked against invoices.

Look for waste: food prepared and not used, stock that spoils, dishes sent back. Even a modest reduction in waste moves the food cost percentage. Our guide to how to reduce food waste in a restaurant kitchen covers practical steps.

Compare actual food cost with what the recipes say it should be. The gap is often where half a point hides. Our guide to actual versus theoretical food cost explains how to find it.

Avoid cost cutting that guests can taste. Smaller portions of signature dishes, a cheaper version of a key ingredient, or removing the garnish that made a dish special can all save money and lose guests. The aim is to remove waste and overspending, not to make the food worse.

If a supplier change is planned, test it first, ideally with the team tasting side by side. If guests would notice, it is the wrong change.

The second month focuses on labour, aiming for around half a point. Look at the rota against the trading curve. Are teams starting long before guests arrive, or staying long after the last tables leave on quiet nights? Are busy services stretched while quiet ones carry too many people?

Move hours from the quiet edges of services to the peaks, and trim the early starts and late tails. Our guide to staff scheduling against the trading curve covers how. Check overtime and agency use, which are often the most expensive hours.

Watch service quality as you change. Ticket times, guest feedback and staff morale should hold steady or improve. Labour savings that slow service or exhaust the team are not savings.

Also in month two, run a menu engineering review. Look at each dish's popularity and its gross profit per plate. Dishes that are popular and profitable should be protected. Dishes that are popular but less profitable can often be re-costed: a slightly different garnish, a better-priced ingredient, a small price adjustment. Dishes that are profitable but unpopular can be repositioned on the menu. Dishes that are neither can be replaced.

Our guide to menu engineering: the four dishes you must act on covers the method. Small changes to the menu can move the margin noticeably, because they affect every plate that sells.

The third month focuses on menu mix and spend per cover, aiming for around half a point. Encourage guests towards dishes with better margins, through placement, descriptions and recommendations, without pushing. Train servers to suggest a starter, a side or a dessert that genuinely suits the table. Make drinks pairings easy to choose.

These moves raise spend per cover and shift the mix towards more profitable dishes at the same time. Our guide to increasing average spend without raising prices covers six moves guests welcome.

Watch the menu mix weekly to see whether the changes are working.

Pricing is a lever too, used carefully. A small price rise on dishes whose costs have risen, or on dishes that are clearly underpriced compared with similar venues, can add to the margin with little effect on demand. Spread rises across a few dishes rather than raising every price by the same amount.

Avoid large or frequent rises, which guests notice. Our guide to menu pricing covers how to price and how to make a price increase well.

Throughout the quarter, look at operating costs for the remaining fraction. Review card and platform fees, subscriptions, energy use, repairs and smallwares. Cancel subscriptions nobody uses. Check whether a platform's fees are worth what it brings. Turn off equipment that runs when it is not needed. Fix the fridge that keeps needing call-outs.

Each saving is small, but together they can add a fraction of a point. They also tend to last, because once a subscription is cancelled or a habit is changed, the saving continues.

Drinks often carry higher margins than food, which makes them one of the gentlest levers for improving profit. A well-chosen house wine, a short list of cocktails that are quick to make, a good non-alcoholic option and a server who offers a second drink at the right moment can all raise profit per cover without changing a single dish.

Look at the drinks list with the same care as the menu. Which drinks sell, which carry the best margin, and which tie up cash in slow-moving stock? Train the team to describe and suggest drinks naturally. A pairing suggested beside a main course on the menu can move the mix without any pressure at the table.

Suppliers can help as well as cost. A supplier who knows the venue's volumes may offer better prices for regular orders, suggest seasonal alternatives that cost less and taste as good, or help reduce waste by delivering smaller quantities more often. Ask. Many venues accept the price list without ever discussing it.

Be fair in return: pay on time, order consistently and give notice of changes. A good relationship is worth more over a year than a single round of hard bargaining.

Quiet nights carry fixed costs with little trade, so they drag on profit. Part of the quarter's plan can be to make them earn more: a set menu, a supper club, an early evening offer, or simply a leaner rota that matches the trade. Our guide to quiet night trade covers the options.

Even small improvements help. A quiet Tuesday that moves from losing money to breaking even adds to profit every week of the year.

Throughout the quarter, watch the guest experience as closely as the numbers. Track feedback scores, review themes, complaints, ticket times and how many first-time guests return. If any of them slip, a change may have gone too far.

The point of improving profit is a stronger business, and a stronger business depends on guests who come back. A quarter that adds two points of margin and loses a share of regulars has not succeeded.

When the quarter ends, keep what worked. Make the waste sheet, the rota habits, the menu changes and the supplier terms part of normal routine, and keep tracking the weekly measures. Profit gained through new habits tends to last; profit gained through a one-off push tends to drift back.

Then choose the next quarter's focus. There is usually another point or two to find, in a different place.

Energy is one of the largest operating costs, and much of it is wasted out of hours: ovens preheated long before they are needed, extraction running all afternoon, lights and air conditioning on in empty rooms. A simple start-up and shut-down routine, written down and owned by whoever opens and closes, can trim the bill without anyone noticing a difference in service.

Check the building's equipment too, ideally with the person who opens the kitchen each morning, because they see what runs when nobody is cooking. A fridge with a worn door seal, an ice machine that runs constantly or a dishwasher used half-empty all cost money every day. Small repairs often pay for themselves within weeks.

Track the chosen measures every week: prime cost, food and drink cost percentage, labour cost percentage, spend per cover, covers and profit per cover. Compare each week with the baseline and with the same week last year.

Expect noise. A busy week or a quiet one will move the percentages. Look at the trend over several weeks rather than any single week, and keep a note of each change made, so you can see which ones worked.

Improving profit is a team effort. The chef controls food cost and much of the menu; the manager controls the rota and much of the service; servers influence spend per cover and the menu mix. Share the plan, the baseline and the weekly results with them.

Explain the reason in terms of the venue's future: the refit, the pay rise, the security of a quiet winter. A team that understands why two points matters is far more likely to help find them than one told to cut costs.

Recognise progress. When the waste sheet shows less waste, or the spend per cover rises, tell the people who made it happen.

Some changes look like savings and are not. Cutting a server on a busy night may save wages and lose guests. Buying a cheaper product may lower food cost and raise waste. Removing a popular but less profitable dish may lose the guests who came for it. Discounting to bring in trade may raise covers and lower profit per cover.

For every change, ask what it does to the guest's experience and to the next visit, not just this week's numbers.

If progress stalls, look at each area in turn. Has food cost crept back up because a new supplier price arrived? Has labour drifted because the rota went back to old habits? Has the menu mix shifted back towards less profitable dishes? Each area needs ongoing attention, not a single fix.

Revisit the largest opportunity. Often one area turns out to hold more than expected, such as a menu dish that is far less profitable than anyone thought, and focusing there brings progress back.

Here is an illustrative quarter for a venue aiming for two points. The figures are examples.

servearound does not hold your stock counts or payroll, but it supports several parts of the plan. With the Analytics module, the menu report shows each dish's units, revenue, share and gross margin once its cost is set, which is the basis for menu engineering, and shows how the mix moves week by week. The dashboard shows spend per cover, and order analytics shows what goes together on the same checks, which helps choose sides and pairings to suggest.

Payment analytics shows how deep the discounts ran and the voids and comps by member of staff, and dishes live in one library, so a re-costed recipe or a new price reaches every menu at once. See Analytics, or get in touch.

For many venues, yes, when it comes from several small changes rather than one big one.

With a baseline, then food and drink cost, which often has the most room for improvement.

Trim hours at the quiet edges of services rather than at the peak, and watch service quality closely.

Carefully, on dishes whose costs have risen or that are clearly underpriced, spread across a few dishes.

The profit the venue makes, on average, for each guest it serves.

Keep tracking the measures weekly after the quarter ends, and make the new habits part of the routine.

Even one point is worth a great deal. Look at where the venue's costs are highest compared with its own past, and start there.

Usually not at first. The people who run the venue, the chef and the manager, know where the waste and the slack are, and the changes last longer when they make them themselves. An outside view can help later, once the obvious savings have been found.

Improving profit by two points in a quarter comes from moving several things a little: food and drink cost, labour, menu mix and engineering, spend per cover, pricing and operating costs. Start with a baseline, track prime cost and profit per cover weekly, and give each month a focus.

Avoid cost cutting that guests can taste, protect service at the peak, involve the team and explain why it matters, and judge every change by what it does to the next visit as well as this week's numbers. Two points found a fraction at a time is how most venues actually find it, and how they keep it.