We all know the food and hospitality industry is big business which naturally has people guessing “How Much Do Restaurants Make in a Day” The amount of money a restaurant makes in a day varies significantly depending on multiple factors, including the type of restaurant, location, size, concept, popularity, and economic conditions.
Infographic on How Much Restaurants Make within the UK
All figures used above are estimates based on statistics sourced from Zippia.com & Statista.com.
Factors that can affect how much restaurants make in a day
Several factors can influence the amount of money a restaurant makes in a day. Here are some key factors that can have a significant impact:
- Location: The location of a restaurant plays a crucial part in its daily revenue. Restaurants in prime locations with high foot traffic or busy commercial areas tend to have more customers and higher sales than those in less populated or remote areas.
- Concept and Cuisine: The type of cuisine and concept of the restaurant can influence its daily revenue. For example, fast-food or casual dining establishments that offer quick service and affordable meals may attract more significant volumes of customers. Fine dining restaurants, on the other hand, may have fewer customers but higher average bills.
- Reputation and Popularity: A restaurant’s reputation, both online and offline, can significantly impact its daily revenue. Positive reviews, word-of-mouth recommendations, and a strong social media presence can attract more customers and generate higher sales. Branding = Sales!
- Season and Timing: Seasonal variations can affect restaurant revenue, with peak tourist seasons or holidays often bringing in more customers. Additionally, the time of day can also impact revenue, as breakfast, lunch, and dinner rushes can vary in terms of customer traffic and spending.
- Marketing and Promotions: Restaurants that allocate a large portion of their time and resources to branding and marketing tend to have higher conversions. Customer loyalty is what keeps brands such as McDonald’s in business for decades.
Which kinds of restaurant businesses make more money
A Restaurant’s performance will differ based on factors such as brand reputation, marketing strategies, and customer satisfaction, however, we have listed 3 restaurants that trend towards most profitability.
- Fine dining restaurants: Fine dining restaurants both in the UK and the US generally have higher profit margins due to their premium pricing with extensive wine lists that cost an arm and a leg. They wouldn’t be in business if they were losing money. So even at their high business expenses there still able to stay profitable.
- Fast food chains: While profit margins per transaction may be lower compared to fine dining, fast food chains compensate with high-volume sales and streamlined operational processes. Economies of scale, efficient supply chain management, and strong brand recognition contribute to their profitability.
- Speciality or niche restaurants: Take a pizza place for example that offers quick service, and low cost of ingredients which allows for a larger profit margin and markup.
The culture of the country is also at play here, many people within the UK are willing to try the new pizza restaurant while being more hesitant towards a vegetarian/vegan place.
Understanding the impact of your expenses on profits
Profitability in the restaurant industry relies on effectively managing costs while generating sufficient revenue. It’s a constant battle between driving margin and lowering costs. Here’s an overview of how expenses can affect profits and strategies to optimise them:
Cost of Goods Sold (COGS): This represents the direct costs incurred in producing food and beverages for the restaurants, including ingredients, raw materials, and beverages. Monitoring and controlling COGS is essential for maintaining profitability which is apart of the financial balance sheet. Key strategies include:
- Menu engineering: Playing close attention to the profitability of each menu item and adjusting pricing, portion sizes, or ingredient choices to maximize profit margins.
- Vendor management: Establish relationships with reliable suppliers and negotiate favourable pricing and terms. Cheaper vendors, higher margins.
- Inventory control: Implement effective inventory management systems to reduce waste, spoilage, and overstocking.
Labour Costs: Wages, salaries, benefits, and payroll taxes contribute to labour costs, which can significantly impact profitability, in short, these are the human resources costs.
- Labour optimisation: Schedule staff efficiently, considering peak hours and seasonal variations in customer demand.
- Employee training: Train employees to handle multiple roles, enabling flexibility in staffing levels and reducing the need for additional labour.
- Performance evaluation: Regularly assess employee performance to identify areas for improvement and ensure productivity.
As artificial intelligence progresses we will begin to see a trend between restaurants incorporating new technologies to drive down labour costs.
Overhead Expenses: Overhead expenses encompass various non-direct costs, such as rent, utilities, insurance, marketing, and administrative expenses. Reducing overhead expenses can positively affect profits. Consider the following strategies:
- Energy efficiency: Implement energy-saving measures to reduce utility costs, such as using energy-efficient equipment and optimising lighting and HVAC systems.
- Technology utilisation: Leverage technology solutions, such as point-of-sale systems, inventory management software, and online ordering platforms, to streamline operations and reduce administrative costs.
- Marketing effectiveness: Evaluate marketing campaigns to ensure they generate a sufficient return on investment (ROI) and allocate resources to the most cost-effective marketing channels.
Our EPOS System
Power EPOS is a market leader in supplying POS and Back Office technology to Hospitality companies, both direct and working with a number of accredited partners. The range of our functionality is supplemented by our ease of integration to popular industry leading niche players focussed on payments, gift cards, membership schemes and Order & Pay solutions amongst others. Talk to us about your current suppliers and we will be honest about how we can improve on or complement what they do for you.