As anyone in the restaurant industry will tell you, most establishments operate on a very thin profit margin. That means that restaurateurs must be especially sensitive to food and labor costs. A small miscalculation here and another there can adversely impact a restaurant’s profitability and cash flow.
Many people that get into the restaurant business do so because they are passionate about food, cooking, and community. However, not a lot of restaurant owners enter the industry with a strong sales background. If your small business is going to stick around for the long run, you’ll need to develop a sales mindset that is focused on profitability. Because profit margins are so tight, you’ll need to build up a cushion of cash to protect you should there be an unforeseen slowdown or you make a purchasing error.
The best way to develop a sales mindset is to recognize all of the good habits that can increase restaurant profitability and make a point to incorporate them into your everyday way of thinking. You’ll need to train your front of house staff to have these same habits if you want to have a successful restaurant.
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Upselling to Increase Restaurant Profitability
The act of upselling can make some folks cringe inside. But whether you run a fine dining or fast-casual restaurant, it is important that you and your employees learn to get comfortable with upselling as it is essential for growing restaurant profitability.
What is Upselling?
Upselling is a sales technique in which the salesperson suggests that the customer purchases an additional item, an upgrade or a more expensive item.
Here’s an example: If you’ve ever eaten at a McDonald’s restaurant you’ve heard the question: “Would you like fries with that?”
This is perhaps one of the most well known and effective examples of upselling, and the simple phrase helped make McDonald’s a global fast-food behemoth. Why you may ask? Most customers go to McDonald’s for the burgers, which have less of a profit margin than an order of delicious, golden french fries. By suggesting to customers that they also order an additional item, which happens to have a higher profit margin, McDonald’s was able to boost sales across its empire.
1. Look at Upselling Differently
If you or your staff are struggling to feel comfortable with upselling, it can be helpful to think of it another way. When executed well, upselling can actually be very helpful in terms of identifying a customer’s needs and suggesting meal items that they are likely to enjoy. Focusing on the customer service component of upselling is an effective way to feel like upselling is less of a sales pitch.
2. Pick the Right Upsell
Upselling requires a certain amount of finesse to be effective. If your upsell comes off as being too aggressive or “salesy” it won’t be as well-received as it would be woven naturally into customer interaction. That’s why it’s important to suggest menu items to the customer that they might be interested in at that moment.
For example, a group of diners coming into your sports bar to watch the big game, a good upsell would be to see if they’d like to try a specific beer on tap or maybe order a pitcher. If you have a sandwich shop, you should be asking customers if they want chips or cookies.
If you can provide your customers with desirable options for upgrades and add-ons, they will be happy to pay for them. The McDonald’s french fry example worked so well because once the customer had the tasty fries for the first time, they were sure to come back for more.
3. Always Upsell
Never allow yourself or your staff to get lazy and neglect to offer an upsell to every customer at least once over the course of their dining experience. It requires commitment and discipline to remember to make an upsell. Just think of it as being helpful to your customer by pointing out menu items they might like.
4. Don’t Overdo It
When it comes to upselling, it is important to know that there is a boundary line that you should not cross when it comes to being perceived as “pushy” to the customer. That line might vary between customers, but as a general rule, if a customer isn’t interested in the upsell, you shouldn’t ask them again. You might wait until later in their meal before upselling them on something different.
5. Make Them Feel Special
Another way to create a good upselling opportunity is by creating a sense of urgency. A good way to do that is with special menu items that you only have for a limited time. Customers will want to try your seasonal appetizers, desserts, and entrees before they are gone, even if you charge a higher price than your typical fare.
6. Keep Practicing
If you continue to practice and develop good marketing habits you won’t only improve your net profit margin over time, but also improve your customer experience. Upselling doesn’t come naturally for everybody at first, but with more and more practice it is possible to become quite good at it in no time!