Expert Ways to Increase Your Restaurant’s Profit Margin

Whoever said “location is everything” wasn’t a restaurant owner. A great slice of real estate can go a long way in drawing attention and foot traffic to your restaurant, but it’s just one piece of the puzzle for operators. Successful restaurateurs must manage inventory, lead a team, balance tradition with innovation, and much more to thrive in an industry known for low margins, high turnover, and even higher expectations.

How can restaurant owners keep the lights on and build a business that lasts? From making a great first impression with diners to motivating teams through tough times, we turned to some veteran restaurateurs to share some of the wisdom that has helped them excel.  Our panel of experts, consisting of eight leading restaurant owners from across the country, offered up their best advice for how to improve operational efficiency and find ways to increase restaurant profit margins. 


Expert Advice for How to Make Your Restaurant More Efficient


Setting Yourself Up for Success

A football team wouldn’t hit the field without practicing, theatrical productions don’t open before plenty of rehearsal, and the experts we spoke to suggest that restaurants shouldn’t be any different. Ellen Yin, co-founder of Philadelphia’s High Street Hospitality Group, especially emphasized the importance of readiness. Her first piece of advice for first-time restaurant owners facing down an opening was simply, “Be ready. Soft open until you feel comfortable.”. Before opening the doors for customers, she even suggested a trial run with trusted friends and family. Just make sure you can really count on them to offer objective feedback. Diners who worry about sparing your feelings could lead to serious problems going unaddressed. 


It’s great to stock up on champagne for toasting a successful opening, but Yin reminds all operators that readiness also means preparing for things to go poorly. In addition to contingency plans, Yin stresses the importance of a contingency fund. Keeping plenty of extra cash on hand reduces your exposure to risk. A backup budget could make all the difference when a piece of equipment goes haywire or your restaurant’s roof starts to leak. 


Your opening didn’t go as planned? Try to focus on the positive and frame your setbacks as learning experiences. Anthony Valletta’s advice for first-time restaurant owners included a reminder that every mistake holds potential lessons. That said, the president of Bartaco added, “a mistake made twice is a decision, not a misstep.” Failing to learn from your team’s mistakes leads to operational inefficiencies that could soon mean a failed restaurant. 


Knowing Your "Why"

Chicago’s Diana Davila, chef-owner of Mi Tocaya Antojeria, believes that industry success begins with a concept. Operators sustain their success and keep hungry customers coming back by continually reflecting on their concept. They should take the time to ensure each element of the restaurant serves their goals. For Davila, establishing a concept does more than set the right tone. It can also help operators find ways to increase their restaurant profit margin. She recommends reflecting on your concept and mission while making just about every early decision. 


“Prioritize accordingly,” she said, “Do we really need to have uniforms? Do we need tons of kinds of glassware or plates?” Commitment to the mission will keep excess costs low while ensuring every customer and team member always knows what to expect. 


Valletta held that asking plenty of questions and taking time to reflect can help operators avoid wasting their time. They might learn that they’re in the wrong profession altogether. “The world isn’t waiting for more of the same thing,” he remarks, “so continually ask yourself why.” 


When it comes to communicating a restaurant’s mission, Valletta recommends a policy of clarity and consistency. Staying transparent with employees and customers shows how much you care. “Clarity is kindness,” Valletta noted. 


Other operators touted the value of flexibility. Yin acknowledges the importance of “a focused mission and vision” for maintaining a cohesive team. At the same time, however, she recommends an open-minded approach to strategy and management to increase restaurant efficiencies; owners should never let consistency turn into inertia. Lessons learned throughout your early weeks and months should inform subtle improvements.


Building Up Your Team

As a restaurant operator, you’ll naturally wear a lot of hats, but even if you’d like to do it all, restaurants depend on diverse groups of talented individuals to work together towards a common goal. It’s impossible to become more efficient or increase restaurant profit margins without teamwork. Nicole Mattson, co-owner of Denver-based Nocturne, put it simply, “your team is everything.”


At both ends of the house, restaurant workers typically contend with long hours and exacting standards. What can operators do to reduce turnover and establish a culture of success? Matt de Gruyter, Next Level Burger’s co-founder, urged industry novices to reflect on the mentors in their own lives. “Approach your team like the best coach you ever had,” he said, “or the coach you wish you had.” 

The owner of Philadelphia-based HUDA, Yehuda Sichel, has found that investing time and money in a great staff is the most important decision a restaurateur will make. This comes down to more than just paying and training your team well. Sichel recommended offering opportunities to invest in a 401(k) or supporting a healthy work-life balance by paying for gym memberships. 

What qualities should an owner look for while building a team? Kyle Tovar, COO of Chicago’s Well Done Hospitality Group, described ideal restaurant employees as “knowledgeable, motivated, passionate, and attentive.” He noted that a restaurant’s team plays the biggest role in establishing an environment where guests can feel at home and create memorable experiences. After all, “ambiance and service” are nearly as important to restaurant success as high-quality food and drinks.  


Remember, there’s no single set of skills or one career path that prepares potential hires for success in the restaurant industry. Even the most impressive resumé can only tell you so much about an applicant. Mattson has hired candidates without hospitality experience and watched them grow into seasoned industry pros. “Add people that will lift the team up and inspire them further,” she said. 


Leading with Confidence

In addition to addressing the value of great teams, the experts we surveyed stressed the importance of strong, visionary leadership. An operator shouldn’t attempt to do it all, but they should set an example for all employees to follow. As Valletta said, “the speed of the captain determines the speed of the ship.” From his perspective, great managers find the perfect balance between “old-school, top-down” leadership and positivity. This earns both the affection and the respect of employees throughout the restaurant. 


While owners and operators should sweat the small stuff, it’s sometimes best for other team members to narrow their focus. Leaders, de Gruyter suggested, should instill a paradigm that helps keep things in perspective. He said that operators should tell restaurant teams to, “focus on what [they] can control and influence and let go of the rest.” He counts on this premise to guide employees through any workday challenge. 

Katie Button, founder of Katie Button Restaurant Group, offered a similar tip to overwhelmed operators, urging them to tackle challenges on an individual basis. Taking this modular approach keeps workloads manageable and allows operators to establish best practices for saving time in the future. This, of course, becomes a recipe for how to make a restaurant more efficient.


Above all, Valletta encouraged owners to rethink their definition of excellence. He argued that the opposite of excellence isn’t sub-par performance, but apathy. Managers should teach their teams to feel the same if they want a workplace defined by passion and commitment.  


Boosting Efficiency

With so much ordering and inventory management to contend with, operators can feel tempted to save time and boost efficiency by relying on preferred suppliers. Davila notes that operators should obtain three quotes for anything they buy. Whatever the product or service, Davila says, “You’re going to see just how wildly different quotes can be and what each person can bring to the table.” 


Efficient restaurants rely on motivated, committed, and goal-driven employees. Sichel promotes investment across his team by working alongside employees to develop short- and long-term objectives. When you help them plan for the future and see the bigger picture, employees will focus their attention and reward you by consistently giving their all.


Sometimes a small team is best for meeting your restaurant’s goals and maintaining a welcoming, supportive culture. “Being short on staff,” Mattson said, “is better than being fully staffed with the wrong fits.” She cautioned new restaurant owners against hiring too hastily. Though periods of high turnover might make it tempting to hire the first candidate who applies, putting extra time and effort into the interview process pays off. 


Overcoming Long-Term Challenges

Even award-winning restaurants face their fair share of setbacks. Without ignoring the industry’s many challenges, the experts we consulted stressed the value of staying positive. Button ensured operators that establishing systems and learning from mistakes will lead to positive change over time. “It will get easier,” she said. 


“Lastly,” Valletta concluded, “remember you don’t have to do this – you get to do this.” Try your best to enjoy the ups as well as the downs. 


Written with help from Grace Dickinson.