Most people would probably answer this question by listing all types of businesses, from bars to pizzerias, delivery services, food trucks, and so on, only considering the cost of sales and the following percentage of the total sales profit.
Against all trends, I think the real question is, “What is profit for you?” Profit at the end of the day will, of course, always be the result of a mathematical operation. It is the result of all sales minus all expenses.
The most profitable business is always the one that has the most significant income against the lowest costs. Of course, the winner is a bar, which sells only drinks. In this case, the margins are the best, and the list of expenses is minimal.
If your google search was only to find the best cash return, that is the answer. The list of the next ten hospitality businesses in order of profitability is easy to write, even if you do not come from the industry.
Common Sense
You only need to apply common sense and think of dishes prepared with low-cost products and with little elaboration. Pizza, Kebab, Take Away, Hod-Dogs, and so on. If on top, you can reduce the fixed costs, such as rent and all maintenance costs to a minimum, it’s the top.!
You get the idea, don’t you?
But whatever you decide, when it comes to starting your Restaurant, you’ve got to have a clear idea of what type of Restaurant you want, because once you start it would be crazy to make a change later on. I have seen people doing it, but it is a hazardous step to do.
So, given that nobody starts a restaurant business just for fun or just for one season, you better have fun doing it in the long haul. Otherwise, it can become a drag over time. Even if your profit is high, if you hate your business, it isn’t worth it.
Running a restaurant business is about serving the best dish, the best drink, the best pizza, the best burger, and giving the best service! So do what you do best, not what brings you a few bucks more into your pocket.
Much Work
If you have fun and do it well, the money will come, despite the type of offer. Of course, you need to start the right way. Know your market, your clients, and have the right offer. I guarantee you that it will be a lot of work, more than you can imagine.
But you know what, I am in this industry now for three decades and have seen all aspects of it. In the beginning, when I started having money in my pocket after finding the right path, at that time, I was working 16 hours a day!
I am not lying to you! I had the money, and I had that beautiful supercar and a flat with all the last tech stuff. But what I didn’t have was time. Time for my friends. Time for my other interests. Time for myself.
My focus was 100% on the profit because I thought it was the only thing that counted. Now, years later, I have created and designed my businesses according to my desired lifestyle. I have, now, a different opinion about the definition of “profit.” I have consequently adapted the equation for my own.
Time
I do not consider profit anymore as my goal, but instead, what became my absolute goal is time. Time to do what I want to do. Time to dedicate to my kids. Time to spend with my partner. Time to dedicate to my health and my hobbies. Time to spend with my friends.
But as well time to dedicate to the development of other business ideas to create different income streams. Yes, because the only way to get wealthy, which is different from becoming rich is to diversify your income streams and build a foundation for your future.
Your vision and reality might be different from mine. Still, the idea of this blog and my course is to give you ideas and inspiration for your way to create your restaurant business.
And all that, my collaborators and I are researching and publishing here is to give you ideas and inspiration.
Lifestyle Restaurant Business
Indeed I like to call it a “Lifestyle Restaurant Business” because a business plan should always respect your lifestyle. So if you are in the starting phase of creating it, you are still able to put it into your equations and forecasts, just and only depending on what value you give to it.
If you are about profit only and do not care too much about your time and quality of life, then I suggest that you focus on the traditional way, which is to decide your offer based on your skills and of course the demand in the, from you, selected location.
The perfect scenario could be a restaurant that offers breakfast, lunch, and dinner. In the best case, your environment allows you to get even into the cocktail and late-night scene.
I was partnering and managed a place with this characteristic for about ten years, and the cash was just flowing. And guess what, it was a hotel too!
But was it the right thing to do?
If you are an investor that is looking to get a simple return for his investment, probably you should look after business like this. You would staff it accordingly and put your guidelines in place.
Where should I start? A question on a napkin with a cup of coffee.
But if you are thinking of starting a restaurant business because you want to become financially independent or living your dream, I would think smaller and focus only on one or a maximum of two of the income lines.
Where is the profit
If you open a restaurant, for example, and you open for lunch and dinner, you can maximize your profits by offering home delivery service or do catering service for little to medium events.
If you are thinking of an Italian restaurant, you can consider whether or not to add pizza to your offer. Think it through: do you want to be an authentic Italian restaurant or a more crowdy ristorante-pizzeria?
Pizza is a big “profit-return” product, but some people are not willing to pay restaurant prices where they serve pizza too. This point should be clear before going on.
However, whatever type of Restaurant you are thinking of, to maximize your profits, you have to create a mixture or variety of dishes. Some of them will be the bait to attract customers.
They are your “hook” and must create what I call the “wow-effect.” On these dishes, the return may not be the best, but meanwhile, you must-have dishes that have a more significant margin of profit. These should be the ones you sell massively.
Your profit-making bestseller must be something that the big part of your customers loves. It can be a particular “pasta dish” or a “steak” or “burger” that you can sell in the mid-price range without creating amazement. The cost of sale should be as low as possible and give you the most significant gross margin as a return.
It must not always be pasta or pizza or burger but can also be a well prepared and presented sort of fish, meat, or vegetable. It is up to you and your client’s needs and desires. In the case of a cafeteria, for example, it can be a smoothie or ice cream cup. Or even a specially prepared coffee.
Overdelivering
Essential for maximizing profits is as well having a menu where you can transform a single ingredient in various ways. For example in our business we sell tons of fresh fruit every day and so we have different ways to sell fruits.
We sell fruit-crepes, a large selection of bowls, fresh fruit smoothies, and we decorate lots of plates with some pieces of fruit. We serve our sandwiches with a fruit skewer.
All this is not just to sell fruit but allows us to increase the prices of every single dish. What cannot be used as decoration will go into our fruit bombe juice. One of our profit-making best sellers!
We have designed our breakfast restaurant to operate six hours a day, 364 days a year. On Christmas Day, we close. We open at 9 am and close the doors at 3 pm. At 5 pm, the staff goes, and all costs stop. The profit comes from the busy hours.
And we have educated our customers to visit us during those opening hours we have decided. It was a strategic and commercial decision. But once we did start, we stuck to it. Day after day. Year after year.
Thinking back to my first ventures where I did invest about 16 hours daily into the Restaurant, I can now spend the gained hours in what I want to.
For example, writing articles for this blog or having fun with my sons. This is, as I told you, for me, the real profit. I have decided on a “Lifestyle Restaurant Business.”
Conclusion:
In the end, I don’t even think it would be fair to say that this or that type of business is more or less profitable. It is a combination of many little ingredients.
It goes from cost control and staffing over to quality and offer. And location, but as well taxes and never to underestimate the financial costs.
You, as the owner, are one of the most significant ingredients of this “business soup.” All that you can give to your business will be a saved cost on your balance sheet at the end of the year. Each hour that you will invest in your business will be money in your pocket.
Each time you can implement a new idea that makes your waste smaller, each time you negotiate a price. All this will be “profit” in your pockets!
Marco Palatini
