Four Steps to Restaurant Success

Success on a Platter

Four Steps to Restaurant Profitability

While the end product is crucial to restaurant success, the profitability of the business is dependent on far more variables. Follow these 4 steps to help increase your probability of success in the restaurant industry.

1. Identify Market & Location

  • Who is your customer?
  • Focus in on the customer. Identify your customer and what they value.
  • What are the demographics of my proposed location? Do they match my target market?
  • Who is the competition in the market? Will I be price, product, or experience driven?
  • What is the cost of this location?
  • Determine what customers will be willing to pay for your service in your immediate market

2. Create Processes & Cost Controls

  • Quantify break even point.
  • How many customers will have to come in my doors each day and at what average ticket price to break even? Is this feasible?
  • Maintain close control of your cash flow- Daily reviews.
  • Every meal should have the exact food cost calculated. Understand how many gross profit dollars your menu items generate.
  • Processes must be established to ensure the same experience and food quality visit-to-visit.

3. Staff & Product

  • Number one key to success is hiring the right employees
  • Create on-boarding process for new hires
  • Job description and duties must be written out
  • Set clear expectations
  • Take a picture of what the dress code needs to look like
  • Cannot hold people accountable without a specific example
  • Assign mentors for all new employees
  • Managers need to praise employees for effort not intelligence. Effort gives the employee complete control. One cannot control their intelligence but they can control their effort
  • If someone fails, use it as an opportunity to learn
  • Labor must be scheduled off of projected sales. Track sales.
  • Know who you are and be the best at it! Keep it focused and simple.
  • Look to locally-sourced foods to keep costs low and customers coming in.

4. Marketing

  • “I know someone who works there.” Customers need to be saying that about your restaurant. People support people they know. Create a personal touch “I wrote my name on your copy of the check so you can ask for me next time you come in. It was a pleasure serving you.”
  • Encourage your loyal fans and customers to share their experiences on social media.
  • On social media don’t just talk about business; talk about things going on in the local community, charity events, employee accomplishments, etc.
  • Tell your story. How many people you employ, the revenue of your business in the local economy, etc.
  • When looking at the website, ordering apps, etc., how simple can you make it so it just works? People like easy!
  • Show you as a company are unique, special, and one of a kind. How do we do this?
  • Create a unique experience- Ex: One pizza store that has dining and takeout gives kids little pieces of dough balls to play with. Supposedly kids love it and it creates another tie outside of the product to the most powerful consumer demographic: children.
  • Consider ROI on marketing efforts
    • Hypothetical cost of marketing campaign $750
    • Estimated new customers from campaign 75
    • Cost of customer acquisition $10
    • Check average $15
    • Profit margin 10%
    • Return from ad (637.50)
    • Number of visits required for ROI on campaign 7
  • Retain business! Most profitable customers you have are your current ones. Keep them coming back.

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Ryan Rao is a Principal of Apex Franchise Development Group and is a franchise development expert who has grown multiple franchise based businesses into national and international brands. Franchising has allowed him to help individuals realize their dreams of business ownership, while permitting them to experience the independence, flexibility, and freedom that comes with being a business owner. He also serves as a franchise consultant, and is a personal growth advocate.

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