While gross profit margins for restaurants can be as high as 60% the net profits, according to the National Restaurant Association, average only about 4 to 5% nationwide. With such narrow profit margins every dollar counts and you need to use every trick in the book to keep them coming in.

Increase Your Gross Income

In other words, increase sales. Use your staff to promote higher profit items and specials. Make sure that your signature items are the most profitable.  Increase your ad budget and do whatever it takes to get more people in the door. There are many creative ways to get the word out about your restaurant including business card drops, flyers and local school promotions to name a few. More sales mean higher profits and lower expenses.  As a last resort you can also raise prices.

Customers love a great deal so one excellent way to improve your restaurant’s profit margin is to offered bundled meal deal. It is often very profitable to sell a menu package such as salad, entrée and dessert or appetizer, entrée and dessert. This offers the customer more perceived value for their dollar and gives you a higher restaurant profit margin.

Lower Your Expenses

Your food and labor are your two largest expenses. Lowering your food cost by using better purchasing techniques. You can sometimes buy some of your food from local vendors as opposed to national chains. Buying in larger quantities at trade shows can save money. Even if you are a small operation you commit to a certain amount for delivery over the next 6 to 12 months and your savings can be substantial. Keep an eye on proper inventory levels and waste. If it goes in the trash then you are bleeding cash!

Determine proper staffing levels so that you are not overstaffed during slow periods. Your employee payroll adds up fast so cut as soon as you possibly can every day.  Most national pizza chains require their managers to cut staff as soon as orders drop to certain levels and are monitored in 15 minute increments. Always keep an eye on the clock to avoid any overtime.

Use Your Restaurant Accountant

Good restaurant accounting can help you identify where to save on expenses and increase your margins. There is a tremendous amount of valuable information about your business in ways you may not have known. If you have a POS system the information provided by it can tell you a great deal about when and how you generate the most profits. An experienced restaurant accountant can help you make a plan to increase profits immediately.  They also reduce expenses by paying your bills and taxes on time. IRS fees and penalties accrue quickly when not paid on time so by avoiding this your accountant saves you money.

Your accountant should guide you on a recurring basis with analysis of your profit margin and bottom line. If your general industry accountant is not doing this for you then find one who understands the restaurant business.http://www.cforas.com/why-us/

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