Increasing sales is of no use unless you know are making a profit on those sales. The old saying “we lose a little bit on every sale but make it up in volume, ” sadly often turns out to be true for many a small business. An owner (or prospective owner) really must understand the key financial concepts in their industry. For food, know your food costs. Know the average ratios for your part of the industry. There is an incredible amount of valuable, low cost information on the web, your local library and your local community college. Use it.
The ‘rule of thumb’ in food is that your food costs should be about a third of gross income. So basically take the cost of an item, triple it, and that is the sales price. $10 steak plate sells at 29.99 Now what is hard about that? Nothing, as long as you can sell a $30 steak plate to your customers in your market. The food cost rule of thumb is for the entire menu, so it is OK to have some items exceed the rule of thumb as long as what is actually sold, at the end of the day, comes in under the target food cost percentage. If you sell 1 steak for every 3 pasta dinners, you’re probably OK to reduce the steak plate price as pasta usually has a much higher margin than steak. Or perhaps you need to reduce the wrap costs (garnish, sides…). Or train your waitstaff to sell sides, beverages and deserts with higher margins.
So making a profit means first of all managing your overall food cost and your sales mix. And adjusting the menu, the specials and the inventory based on actual saless and actual costs. So you need to track sales and costs on a regular basis. Get food costs and sales reporting going on a regular basis, then turn your attention to your other costs.
After that you can adjust pricing, try specials, even coupons to increase sales – as long as you are managing your margins. A profit margin gives you room to experiment, a margin for error.