The Best Methods for Restaurant Revenue Management

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Should you be focusing on increasing your sales or decreasing your costs? Let's break it down.

Should you try to increase your sales, or should you focus on decreasing your costs? This is the age-old question when it comes to restaurant revenue management.

There is no doubt which one is more glamorous than the other - increasing sales! Being that owner/manager that can increase restaurant sales by 5–10% will, without a doubt, receive huge plaudits.

Sure, increased restaurant sales are important, but they may come with an increase in labor and operational costs while also resulting in a decrease in customer satisfaction. After all, increased productivity does not always equate to increased customer satisfaction.

This, in the long term, can be detrimental to your restaurant.

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Simple guidance to demystify your finances

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Restaurant Revenue Management 101

Increasing sales and reducing costs aren’t all that different. There is one major factor that they both need in order to work, and that is accurate data. Without this, your restaurant will be unable to pinpoint and act on the factors that affect your business’s revenue management.

We've put together a list of three points for both reducing restaurant costs & increasing restaurant sales that should be implemented in your restaurant immediately.

Increasing Restaurant Sales

1. Add an Integrated CRM System

A Customer Management System (CRM) is an approach to managing a company’s interaction with current and future customers. This system isn’t just for big sales teams - it is for restaurants too.

A CRM that is connected to a restaurant’s POS system can arm restaurants with valuable customer data. With this, restaurants have a database of customers with specific ordering preferences and contact information at hand. Knowing your customer base inside and out helps with loyalty, upselling, and customer happiness.

Your restaurant can also use this information for marketing activities and customer loyalty programs. Why not give your customers a reason to come back to your restaurant by rewarding them for repeat business? Don't forget that it costs 500% more to acquire new customers than it does to keep current ones, so reward your regulars and see the profits roll in!

2. Implement Menu Rotation

This is something most restaurants dread. Having to think up of new recipes, researching what items worked well last year, and changing all the menus can be a costly and time-consuming process. Saying this, menu rotation and testing is a must to keep your restaurant fresh and in season all year round.

Using analytics from your POS system will mean you can make more informed decisions when it comes to menu engineering and rotation. This accurate data means there is less guesswork when it comes to deciding on seasonal dishes. You can look at what items worked well last season and see if prices can be increased on these dishes.

If you struggle with creating new menus why not check out this free menu engineering course that can help you increase your sales by 27%.

3. Start Using Mobile Service Tablets

Do your servers spend their days running to and from the kitchen with their order pads? Do you chefs get frustrated with hard-to-read order slips and mixed-up specifications that customers have? By implementing mobile service tablets, these headaches become a thing of the past. The ordering process is streamlined and immediate, which can improve your order output by 15% or more.

All this data is easily captured via the mobile service tablets and is plugged straight back into your POS's built-in CRM. This way, all the information is accurate is easily accessed. 

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More orders, more profit – a guide to understanding your restaurant sales

You must have Javascript enabled in order to submit forms on our website. If you'd like to contact Toast please call us at:

(857) 301-6002
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Restaurant Name is required
What is your role? is required
What best describes your restaurant type? is required

We’ll handle your info according to our privacy statement.

Decreasing Restaurant Costs

1. Focus on Effective Scheduling

It takes an average of three hours to create restaurant employee schedules. With managers being among the highest paid employees within a restaurant, the task of employee scheduling accounts for a huge chunk of a restaurant’s labor costs.

Typically restaurant managers use multiple spreadsheets and excel to schedule their employees. Excel is for numbers, not for people. 

Managers have to regularly adjust these schedules when requests for time off and shift changes come in. This takes huge amounts of time, not to mention distributing the manager's already busy schedule.

This is where an online scheduling platform comes in. These types of platforms can save your managers multiple hours each week. Also, you can check out these 7 tips you can reduce costs through effective scheduling.

2. Start Inventory Tracking

This is an area where restaurants have a major problem. It isn’t the most popular task when it comes to restaurants. In fact - most restaurateurs find it to be arduous, time-consuming, and frustrating. Make no mistake, when inventory tracking is done wrong, that's exactly what it will be.

However, restaurant inventory management is critical when it comes to ensuring profitability. The main issue with inventory tracking in restaurants is the complete lack of structure and accurate data.

So, let's fix that!

This is where an inventory tracking system can help restaurants reduce waste, over-buying, and over-portioning. This will, in turn, reduce the restaurant's costs and increase profits.

3. Pay Attention to Employee Time & Attendance Tracking

Most businesses with hourly paid employees use pen and paper to ensure employees clock in and out for shifts and breaks.

This method is broken. 

With multiple timesheets, illegible handwriting, and employee time theft, it ends up costing restaurants thousands of dollars each year because of inaccurate or wrong data.

Let me hit you with some stats from the American Payroll Association:

  • 74% of employers experience payroll losses related to buddy punching.
  • Buddy punching losses average 2.2% of gross payroll, and that’s just one form of time theft.
  • The average weekly “theft” of time long lunches and breaks, tardiness, early departures, etc.) is four hours and five minutes per employee per pay period.
  • Inputting time cards manually can cost 1% to 8% of your annual gross payroll due to human error. This can come from keying in numbers incorrectly, transposing numbers, or misreading handwritten records.

Simple apps can be used to capture employee clock in, out, and break times. This along with image capture of employees, when they clock in, will save your restaurant thousands of dollars each year.

If you are searching for other ways to reduce your restaurant’s labor costs then look no further! Check out these simple, everyday tips to help lower labor costs in your restaurant.

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DISCLAIMER: This information is provided for general informational purposes only, and publication does not constitute an endorsement. Toast does not warrant the accuracy or completeness of any information, text, graphics, links, or other items contained within this content. Toast does not guarantee you will achieve any specific results if you follow any advice herein. It may be advisable for you to consult with a professional such as a lawyer, accountant, or business advisor for advice specific to your situation.