How to Maximize Revenue Through Table Mix
When it comes to overall Food & Beverage profits, the amount of revenue doesn’t always correlate to profitability, and no matter how much revenue a restaurant makes, there is a potential it can lose money on the bottom line. In other words, a busy restaurant with high revenue may not be as profitable as a smaller restaurant with lower revenue. However, we all know that for a restaurant to make a profit, it needs to maximize revenue and capitalize on its full sales potential.
As revenue doesn’t necessarily dictate overall bottom-line performance, just because a restaurant appears to be constantly full with a lineup of customers it doesn’t necessarily mean they’re maximizing their full revenue potential.
You may be thinking that the restaurant in this situation is most likely not maximizing the top-line revenues due to low menu prices, limited training or expertise in the art of selling, or the service team is spread too thin and can barely get through a shift – let alone upsell.
When operations are not meeting bottom-line profit performance, there’s a tendency to start looking at the expense lines as the problem, which in many cases, it is. They start to look at waste, wasted food, lack of employee productivity, and every other consumable expense line. We’ve all been in situations where we need to reduce costs to maximize profitability. In my opinion, reactionary cost-cutting is a symptom of an inadequate and unstructured financial model.
To be profitable in food and beverage, operations need transparent and proactive financial structures and systems where problems can be easily identified. You need to be able to drive your financial performance in a more strategic and structured fashion, where bottom-line performance is not solely based on analyzing/cutting expenses.
One area that many restaurants often overlook is their table configuration and how it can impact top-line revenues. It is pretty simple. If your top-line revenues are maximized, and you have the proper controls and structure in place for your expense items, there’s absolutely no reason that your restaurant cannot turn a profit of 15% or more.
Restaurant table configurations and room layouts come in every shape and size imaginable, from large common tables, banquettes, booths, two tops, four tops, six tops, and everything in between. There’s no question that the table configuration and layout can dramatically improve the look, feel, and ambience of the restaurant. Another factor when operators are making decisions on table configurations is the overall cost associated with the tables. Let’s face it. We try to reduce expenses and costs wherever we can, and a four-top table, in theory, is less expensive than two tops if you’re looking at the cost per seat.
There is one factor that can be overshadowed by design and the cost of furnishings and can significantly impact the restaurant’s top-line performance. That’s the table mix. This is where the operator needs to consider the type of business and customers and ensure that the table sizes match their group sizes to maximize their seating capacity.
Operators need to start looking at the seats in their restaurant in the same way hotels look at their guest rooms and that a seat in a restaurant is a perishable asset. The revenue can never be recovered if a hotel room goes unsold for a night. The same goes for a seat in the restaurant. Every seat unsold during a table turn can never be resold for that period, and the revenue potential is lost. The key is for operators to understand their demand, or, better yet, the potential demand during their peak periods.
So, What is the Right Table Mix?
It can be very hard to predict the ideal table mix when opening your restaurant. However, if you’re able to start from scratch, you’ll be able to map out floor plans and seating configurations and create a plan with enough variety and flexibility to make adjustments as you go.
How Do You Know?
It is generally easy to tell if you’re maximizing your table performance. Look around your restaurant at how many seats are empty or the percentage of usage per table. To get a better understanding, track your actual group sizes by hour and by day of the week over a period of time. Using this data, you will be able to see a clear pattern, and you will be able to develop a table mix that can get you as close to 100% capacity as possible.
A Few Changes Can Make a Big Impact
In one case, we observed a 120-seat restaurant. It seated 70% of their tables with 2 people or less. Since this restaurant only had 4 top tables and 4 top booths, the maximum capacity they achieved at any given time was 78 people or 65%. We showed that by changing 10% of their tables (3) from 4 tops to deuces (6 tables) and using the same number of seats, they could increase their revenue by $15,600 per year by only maximizing those seats 2 times per week. When the change was made they found that they maximized those seats 10 times per week for a total yearly revenue increase of $78 000.
Table load analysis is a simple and effective way to start maximizing your potential during peak periods, and with a few small changes, you can improve your top-line performance.