How to impact restaurant profit margin

Updating your menu cost is important to maintaining restaurant profit margin

As  a restaurant owner, it is important that you evaluate your menu costs on a fairly regular basis.  If it’s been more than three months since evaluating your menu cost then there is a good chance you could be losing money.  Managing supply cost is critical no matter what business you are in. You have to know where your product costs are to price your product, or in this case, menu items appropriately.

Here are some things to consider as your supply costs increase:

Profitability.  As we mentioned before, you have to know what your costs are to price your product to maintain a profit margin.  Over time supply costs can fluctuate so it’s important to fluctuate your menu prices with them, if necessary.

Competition.  Your profit margin is consumed as costs increase forcing you to possibly raise your prices. While raising your prices is an option, customers will only tolerate so much before deciding to go elsewhere.  Knowing where your competition is positioned can help you make better decisions on what adjustments you need to make.

Recipe changes:  Instead of increasing prices or reducing portions perhaps a recipe change can help you control costs while still delivering a high quality product.  Ask yourself can you replace a higher cost ingredient with a lower cost ingredient as an alternative.

Product sourcing: Where you choose to source your ingredients is another important factor to product costs.  Avoid putting all of your eggs in one basket and seek out various purveyors so you can compare costs and possibly negotiate discounts.

Keeping up with menu costs is an ongoing exercise and is very important to managing your bottom line.  Make this a standard part of your routine to ensure your restaurant’s success!






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