So you’ve finally achieved the dream of opening your own restaurant or opening up again!
Maybe it's a quaint little bistro off the beaten path. Or maybe it’s a fine dining restaurant where you’re letting your creativity run wild. Or maybe it’s a simple budget restaurant where you serve dishes from your culture.
At this point, it may feel like all those years of hard work has finally paid off. And you will be forgiven to think that the hard part is over. But in reality, it has just begun.
Now start the long hours spent planning, taking care of logistics and making the hard decisions. Everything that needs to be in place for your restaurant to become a financial success.
But with the way the current economic scenario is, with massive turnover, high labour costs, exorbitant rents and unforeseen effects of negative online reviews, running a successful restaurant is much harder than ever before.
However, what will ultimately decide whether your restaurant becomes a household name is this - your profit margin. And one of the most important metrics to look at when you’re trying to increase your profit margin is the Average Per Cover or APC.
So what exactly is APC? Simply put, APC is the revenue you generate from each customer who walks into your restaurant. This means if you have a 50-seater restaurant and want to earn a daily revenue of USD 15,000, assuming you are open for lunch and dinner-your APC will need to be USD 150.
APC is affected by multiple variables and dynamic factors, including the type of establishment you’re running. A fine dining restaurant will generate a higher APC, but might only allow for one rotation of customers per session, while a budget restaurant may generate lower APC, but will allow for more rotations per session.
So how can you ensure your APC stays high enough to meet your revenue goals and turn your restaurant into a success? I’m glad you asked.
Here are four aspects you need to consider and monitor in your restaurant to make sure you earn enough revenue to be profitable in the long run.
1. Plan for the ebbs
In the restaurant business, it is very common to experience ebbs and flows in customer traffic. There will be times when you will be completely swamped, just like there will be lean periods where you might struggle to fill every table.
It is important that you track both the peak and the lean periods right from the start so you understand when customers are most likely to fill your restaurant without any effort from your side, and when you will have to work extra hard to get customers through the door.
And once you realize your restaurant’s lean periods, it is easier to start rolling out ideas such as offers, incentives and promotions during these times, ensuring your business continues to flourish and thrive through it all.
2. Reduce overall food costs
When your sales increase, the amount you spend on food, overall, will definitely go up. But you can take steps to minimize wastage, negotiate better rates with suppliers and even plan your menu better to ensure that the cost of food stays low, allowing you to make more profit per cover.
Even purchasing food in bulk, or during periods when certain ingredients are cheaper, can go a long way in lowering the amount you spend on food. You can also source ingredients locally, which doesn’t just lower your cost but also helps the local economy.
3. Cut down your overheads
When you’re running a restaurant, there are many overheads such as rent, salaries and utilities. And while you can’t really do much about your fixed expenses like rent, you can definitely take steps to cut down on your variable overheads.
Using energy-efficient equipment to lower your utility costs, hiring staff that can multi-task and reducing wastage in the kitchen are just some of the many ways in which you can cut down on your overheads, which in turn will increase your profitability.
4. Optimally utilize technology
Today, the businesses world over are using technology to lower costs and increase performance. And the restaurant industry is no different. Something as simple as installing a Point Of Sale or POS system can help reduce costs and make your restaurant profitable.
A POS system can help your restaurant in many ways:
● Track inventory to create optimal reordering schedules
● Reduce wastage due to spoiling
● Track sales to update inventory
● Increase table turnover rate and efficiency
You can even partner with online delivery solutions to expand your reach even further without needing any additional investment or staff hires.
These are just a few points for you to keep in mind, and start observing and analyzing immediately, that will have an instant positive impact on your restaurant’s Average Per Cover.
And if you ensure that you stay on top of these aspects, a lot of your day-to-day stress will decline over time.
I hope this has given you a clearer idea of Average Per Cover and the steps you can take to improve your restaurant’s APC.