Understanding your restaurant's fixed costs per hour of opening
, 10 May 2021
Whether your restaurant is open twenty hours each week, or eighty hours each week there are going to be fixed costs that have to be covered with revenue made during those opening hours. Sounds obvious? Use these online calculators to determine how much revenue you need for each hour you're open and some ideas about how to make money from them all...
Rent & wages are typically your largest expenses - you should know them both as a monthly figure right now. They might change a little with the seasons, but knowing an average is highly recommended to stay on top of things. Then comes the power/gas bill, compliance costs and other bills which have to be paid before you've even bought any raw ingredients.
With the calculator below, you can enter your fixed costs, along with the number of days and number of hours you are open. This will calculate your fixed operating costs per hour of opening.
Armed with this knowledge, it's time to consider how much money you're potentially losing when your "off-peak time" means you're pretty much empty.
As we all know, off-peak opening times can't really be avoided; for example, you might open the doors at 5pm, but not usually get people through the doors until 6pm. However, people walking past between 5pm and 6pm and considering where to dine later in the evening will notice whether you are open or not. They will also notice whether there is much going on - People Follow People. So... you open at 5pm and hope for the best.
Let's then consider how many covers you need to cover these expenses. Use the calculator below to calculate the revenue and Gross Profit of a table of four people. You can adjust the typical spend and the margins according to your restaurant's business model:
In our example here, the Gross Profit of these four people ($175) almost covers the fixed operating costs of that one hour ($182). It doesn't factor in the variable costs of food, but it's certainly a start.
And if that one table, positioned well in a visible part of your restaurant attracts another table of four people, then you're starting to make some money at a time you're usually losing it.
How do these numbers compare for your restaurant?
The Power of the Early Bird Special
An off-peak angle we are particularly passionate about is the early bird special. When you need to get foot traffic through the door, it’s especially important to make the most you can out of typical lulls in service and cover those hourly fixed costs.
Check out the calculator below which shows the Revenue & Gross Profit of a 'First Table' sold via restaurant discovery App First Table. While The food Revenue is lower, the guests are easily upsold more drinks by your team and the Revenue 'lost' in the food is offset and even profited upon. Again, enter your restaurant's figures to calculate the result and compare with the previous calculator.
If you’re keen to find out how you can start making money during that first hour of service and add this strategy to your off-peak marketing efforts, download our free guide below. It explains exactly how it works, including a breakdown of the costs involved and potential ROI.
The best part is, unlike many other solutions, First Table is commission-free, there are no monthly plan charges and there’s no fixed-term commitment, so take a look and get in touch if you feel it’ll be beneficial.
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