CEO, Chiranjeev Restaurant and Foods Pvt Ltd.
Malaka Spice, a chain of Inspired Southeast Asian Cuisine which is a part of the Chiranjeev Group is a 23 year old restaurant chain. Our blogs will help new and budding hospitality entrepreneurs to understand and navigate through this challenging industry. Our blogs will also give interesting insights into the economics of your business for those who are struggling with finances.
Why Aren’t Your Sales Higher?
One of the most frequently asked questions by operators is how do we increase our sales? While there are certainly many ways to accomplish this objective, it is difficult to provide advice without first knowing the reason behind low sales.
While I list a set of possible problems below, it is very important to first look inwards to see which of these problems are in our control and can be solved, before we spend big money in Marketing.
Low sales can usually be attributed to one or more of the following problems:
Consumer dining trends are forever changing. Restaurants have to adapt to these changing demands. A gradual decline in sale may be an indicator that it is time to re-evaluate your concept.
It is very important for the owners and chefs to be aware of the new trends and keep tweaking the offerings in the restaurant. Introducing some new items on the menu, revamping the cocktail menu, introducing a seasonal menu are some of the things that could be done.
These could be used as a tool to connect with your regulars and establish a relationship with them.
Lack in Consistency
The lack of quality and consistency in guest experience and in executing day to day business is the single biggest reason for low sales. If you want to improve your results, you must first improve the guest experience.
One of the main reasons for inconsistent service is because the service expectation is not clearly defined and the team has not been trained appropriately for the same . Lack of consistency can be addressed by drafting Standard Operating Procedures and by continuously training the team.
The price/value perception is out of line. Great restaurants can command a higher price point. But even great restaurants have a ceiling when it comes to price vs. value perception. If your customers are having difficulty in justifying the price you are charging them, then you have two choices:
- Improve the guest experience to align with your prices- This can be achieved by improving the overall ambience of the restaurant. The service of the restaurant also helps align this perception. Having a robust training plan thus becomes paramount.
- Lower your prices to align with market demand . What this means is that they do not slash the prices but introduce value for money strategies during low meal periods so that guests can try and experience the restaurant at lower prices. This is where one can target and introduce the brand to the young and to the ones who are sceptical to try you because of your price point. A great experience will ensure that they choose you when they are out with their family or when they are celebrating some special occasion. Strategies like these will help one build a sustainable business and help create a flow of new clientele to the restaurant
It’s very important for the operator to have a deep understanding of his P&L so that he can calculate his Break-Even accurately before introducing such marginal cost strategies. If done without understanding this, it could be a deadly financial trap for the operator.
Location, location, location
A great location can help overcome other shortfalls, but a poor location may be impossible to overcome – regardless of how good your food and service are. Some of the factors affecting your location are traffic counts, parking availability, surrounding market and ease of access.
Lack of marketing or market awareness
Sadly, the first reaction by many restaurant owners to increase sales is to immediately increase their marketing budgets. While this tactic may work, keep in mind that if the quality and consistency of the guest experience is lacking the only thing your marketing will accomplish is to let more people know (faster) that you may not be a good restaurant. Be sure you have your act together before embarking on heavy marketing or advertising.
Keep in mind that low sales are NOT your problem. Low sales is a SYMPTOM of one or more core issues that are causing fewer first timers to come in or keeping existing customers from returning more often.