Four sure-fire ways to maximize your restaurant’s summer business

By Liz Teodorini May 6, 2014
Four sure-fire ways to maximize your restaurant's summer business

The busy summer season offers tremendous opportunities for profitability, particularly for restaurateurs. However, the tendency is to overspend because business seems to be booming. Too often, restaurant owners over estimate and lose sight of profitability margins by stocking too much product, overstaffing, or throwing money at expensive promotions. If you’re looking to boost your profit this season, here are the four ways to build your business.

1. Make informed projections

When it comes to predicting the future, look to the past for the information you need. Review last year’s business by answering these questions: What was the sales volume? How much was spent on inventory? How much did you pay in wages? Then use these numbers to plan. By doing this one thing, you’ll already be a big step ahead in terms of smarter spending.

Don’t just look at each month as a whole; look at fluctuation in income and expenses by week too. Summer holidays can attribute to massive changes in average business volume. For example, when it comes to summertime dining, the first week of May will look drastically different from the last week. The same thing goes for September: early in the month, it’s still patio season, but in the later weeks, temperatures (and customers) can cool off pretty quickly.

Accurate projections save you money on your two highest costs: food and staff. When you’ve hired the right number of people and ordered the right amount of food, you’ll make a big correction in overspending – and start seeing greater profitability.

2. Put in a patio

Summer offers plenty of unique business-building opportunities. The biggest one is also the most obvious: warm weather. Restaurants with patios can capitalize on people’s desire to be outdoors, particularly in Canada, where the long winters translate to a strong appreciation for summer and for eating and drinking al fresco.

Beyond simply adding extra square footage, a patio can make a huge difference to your business. If you’re considering adding outdoor seating to your venue, calculate the break-even point based on the number of tables times your average table cheque, then subtract a several days for bad weather. (Go back and look at local forecasts for the past couple of seasons in order to determine a good average number of cool and rainy days in your area.)

Adding a patio can be costly, but it is a one-time cost. Just be sure to factor off-season furniture storage into your projection. With creative financing options, you can pay off your patio in a year.

“Many small businesses struggle to access the funds they need to grow,” says small-business finance expert Diane Capobianco, from iCapital. “If cash flow is tight and there is no savings to tap into, manageable funding arrangements are available for Canadian small businesses. Cash advances, for example, allow businesses to expand, then repay through a small percentage of each day’s sales.”

3. Run promos and events

Summer is all about fun – there’s no better time to entice customers with promotions and parties. Introduce a special summer menu or specialty drink. Tie in a sporting event with a promo (e.g. the FIFA World Cup). If you have slow periods, spice them up with customer incentives like Summerlicious-style prix fixe pricing or a great Groupon deal. (And don’t forget to track those promos and use them for next summer’s projections.) If there’s a baseball league that practices in your neighbourhood, sponsor them and invite them to celebrate (or drown their sorrows) at your establishment.

4. Staff smart

The trick to avoiding overstaffing and never getting caught under-manned is to revisit last summer’s files and calculate the number of people you needed every day. If you decide to put in a patio, ensure you’ve got enough people to cover it. Also, remember that hiring strong, experienced employees pays off; for example, an experienced cook will work faster and waste less.

So how do you get experienced summer staff when you’re dealing mostly with students, or part-time hires? Do everything you can to keep your best employees from year to year. There’s no better way to find dependable people than by getting the good ones from last summer to come back.

Finally, keep CRA rules in mind. Whether your summer staff are part-time or full-time, don’t put them on the books as subcontractors. It’s a classification that’s frowned upon by the CRA since it doesn’t involve deductions. All restaurant workers must qualify for T4s. So whether they work a day, a week or a month, they will be required to file taxes, and you are responsible for paying their share of EI and CPP.

By analyzing past costs and revenues, you can better predict this summer’s business. This will mean lower food and labour costs. If you aren’t already capitalizing on seasonal opportunities, consider making a change this summer: add patio seating and seize all the warm-weather opportunities you can.

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About the author:

Liz Teodorini is Marketing Director at iCapital a hassle-free and flexible financing solution for Canadian small businesses. The company, which is committed to being Canada’s most caring and responsive loan-alternative provider, frequently publishes articles relating to small business finance.

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