As New Mexico’s leading association for restaurant owners – with a staff that has years of restaurant ownership & management experience – we know first-hand the excitement that comes with owning your own restaurant business.
It’s exciting, but achieving success in this industry isn’t always easy.
You’ve got to consider food costs, labor regulations, operations, zoning, menu planning, marketing… the list of things you need to get right can be daunting! And getting it all right can be very time-consuming, if you have to figure it all out yourself.
But what if I were to tell you that increasing the profitability & success of your restaurant really only boils down to 5 simple “levers”?
1. Increase your profit margins, meaning you make more profit per each transaction.
2. Decrease your losses, meaning you spend less money in the running of your restaurant
3. Increase the amount of customers, meaning more people know about & decide to actually come in and eat at your restaurant.
4. Increase the frequency, meaning each customer comes back more often.
In fact all business success boils down to just these 4 things: Higher Profit Margins, More Customers, Fewer Losses, and more Repeat Business.
Of course each of these “success levers” entails many factors – so I’m about to share the ones I’ve personally seen make the most difference in the successful New Mexico based restaurants we have in our association; as well as in my own restaurant businesses, which I ran for 20 years.
5. If you’re wondering what the 5th success lever is, well it’s the overall running of your restaurant: The systems, philosophy, and day to day management that make it easier for you & your staff to successfully run your restaurant on a daily, monthly, and yearly basis.
So let’s get into the battle-tested, tried and true recipe for success for YOUR New Mexico restaurant business.
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These tips are written by the New Mexico Restaurant Association CEO Carol Wight.
Carol became the CEO of the New Mexico Restaurant Association in 2002 and loves running the association on behalf of the restaurants in New Mexico. She spent 20 years in the industry as a restaurant owner and consultant.
At 21, Carol opened her first restaurant with no prior experience in the industry. By the time she was 30 she owned three successful restaurants in Las Cruces, NM. Utilizing entrepreneurial skills and restaurant expertise, she became an international consultant in destinations like Abu Dhabi and Tokyo.
These tips are based on her own experiences, as well as first-hand insight into the experiences of NMRA members.
If you would like information on becoming a member of the New Mexico Restaurant Association, feel free to call our offices today to find out more: 505-343-9848. Or schedule an appointment by clicking here: nmrestaurants.org/free-consultation
Of course running a restaurant can be thrilling in and of itself – but what’s the point if you aren’t making a good living for yourself and your loved ones?
Follow the steps below to quickly start seeing more profit rolling in, in an industry already plagued by razor thin profit margins.
You need to be able to calculate your food cost in order to know how you are doing.
Why? Because a high food cost can eat into your profit margin, which is already quite low for restaurants! You want to reduce food costs and raise profit margins as much as possible, while maintaining quality. Doing this will really help your bottom line, and success.
Use the food cost percentage formula to get clear on your own food costs:
Food Cost Percentage Formula = (Beginning Inventory + Purchases – Ending Inventory) ÷ Food Sales.
Example:
If your food cost percentage is too high you are either not charging enough, your portions are too big or your employees could be stealing from you.
In the example above, that restaurant might want to lower their food cost by 5-15%, as the average food cost percentage is 35% for a fine dining restaurant and 25% for a quick service restaurant.
The most successful franchises around the world pay very strict attention to their food cost percentages & margins, which is why they are so massively profitable (think McDonald’s & Burger King).
In short, knowledge is power - keep yourself empowered!
If you are wondering about your own food cost margins or point of sale system, we have seasoned restaurant professionals with over 90 years of combined restaurant experience on our staff, happy to answer any questions. Feel free to call us directly at 505-343-9848.
When it comes to increasing your profit margins, It’s not enough to know your food cost percentage - you then want to tweak your menu until your food profit is at an optimum level.
It's time to give your menu a profit-makeover!
Here are the top ways I have seen restaurants increase their food profit:
Want help making your menu more profitable? We'd be happy to help. Call us directly at 505-343-9848 to speak to one of our New Mexico restaurant success experts.
Offering take out & catering is an excellent way to supplement your restaurant income – in fact, I’d say it’s the best way for an established restaurant to substantially increase their revenue & profits.
It’s also a great way for your employees to supplement their regular hours with additional hours.
Finally, catering is a way for your to gain more exposure, while creating more loyalty with your current clientele.
Win-win-win!
Here are my top suggestions to adding a profitable catering arm to your business, or making your current one more successful:
One restaurant owner shared that catering has kept his business profitable throughout the multiple economic downturns over the last 30 years – especially the most recent one.
If it weren’t for catering, they might have gone under!
Still not convinced? Think about this: Catering is a $52.3 billion business, according to Technomic. Not only that, according to the USDA, Americans increasingly consume more food away from home (from 18% in 1978 to 32% in 2008). - Both of these trends are only on the rise.
Adding a catering arm to your business is like diversifying your assets and adding another stream of income to your profits.
We can help you better set up, organize, and get the word out about your catering business. Here's how:
The final step in the profit-margin pillar, is to make sure that your local, state, and government laws aren't actively working against you when it comes to making a profit from all of your hard work.
Almost every year a new proposal comes through that would be damaging to New Mexico restaurateurs. If left unchallenged, these proposals can negatively affect your profits in a significant way.
It’s important to know what proposals are good for restaurant businesses, and which are not. And use our collective power to fight for our small business success – the lifeblood of the US economy!
The 2 most effective ways that you can ensure your rights are defended at a state and national level (and that your profit margins don’t get ruined by unfair policy):
1. Keep on top of the latest policies you need to be supporting, and what you need to be opposing, here: https://www.nmrestaurants.org/legislative-issues-2018/
2. Join your state restaurant association, which fights non-stop to ensure bills that are harmful to restaurant owners do not get passed. If you live in New Mexico, your association is the New Mexico Restaurant Association (NMRA).
Just last year NMRA was a leader that fought and successfully defeated Albuquerque sick-leave ordinance, which would have cost Albuquerque businesses an estimated $38 million annually.
Individually NMRA saved the average restaurant $10,000 annually.
We could not have done this without the organized & unified front of an association, our collective power, and the help of our NMRA members.
Want to join us and help make us stronger? Call us for a no-obligation chat: 505-343-9848.
NEWS FLASH: For readers of this article only, we are offering an exclusive one-month free membership promotion!
It’s a sobering fact that decreasing expenses & minimizing losses had to be the longest section of this restaurant success guide.
But the happy news is that most of the following tips are actually quite easy; and low hanging fruit you can pick right NOW to decrease your own risks & losses.
Decreasing expenses & minimizing losses both directly equate to a more successful restaurant. Here’s how:
Even though we all live in the modern year of 2018, some restaurants are still overpaying for basic services like it’s 1999.
The first step in decreasing your restaurant expenses, is to get smart about overhead costs and stop overpaying for things that you simply don’t have to anymore!
Take advantage of all of the easy ways you can reduce your unnecessary restaurant overhead costs – & save yourself thousands of dollars every year.
There are many costs that you might consider fixed costs in your restaurant business that could be lowered with just a bit of research & savvy.
One of those savvy ways is to become a New Mexico Restaurant Association Member. For little more than $25 a month you can be a part of an association that negotiates all sorts of group discounts on your behalf, and helps you keep overhead costs low.
I am always amazed that some restaurant owners are still paying thousands of dollars a year for their outdated POS (Point of Sales) systems. What a waste of money!
By switching to a more modern POS system, not only can you start saving thousands of dollars per year, you can more effectively stay on top of your overhead costs too. Most modern POS systems have ways for you to monitor cost controls - like labor costs per hour and even food cost per day.
We looked high and low before deciding on what we believe to be the best POS on the market for restaurant owners in New Mexico. Because of this, we highly suggest our endorsed partner LAVU for its ease of set up and use as well as its robust reporting and ease on your pocket book.
Not only that, as a NMRA member, you can use this advanced POS system at a significant discount. Maybe in the past you had to pay $50k for the machines, and $10k/year for a good POS system, but as an NMRA member you can be paying as little as $79/month for one of the best POS systems on the market.
Here are more ways that NMRA can help you significantly save on restaurant overhead costs in New Mexico:
These are just a few ways a membership in NMRA can help you drastically reduce your overhead costs and help you stop unnecessarily overpaying for basic services.
Feel free to call us directly at 505-343-9848 if you have any questions about these or any other membership benefits.
In the restaurant business we need to be aware of another unnecessary but common loss that many restaurant operators are suffering from: theft from employees. Sadly it is an all-too common source of food loss and profit loss.
So beyond just taking inventory monthly; it’s also important to take a quick daily inventory of high cost items and compare it to your daily sales too. This way you will know early if someone is stealing from you.
You don’t need to take a full inventory every day, but do take a daily inventory of your high cost food items (such as high cost meat items like shrimp and steak).
Then, of course, always take a full monthly inventory. (Big brands like McDonald’s & Pizza Hut also do weekly inventory.)
Unfortunately, I have seen many restaurant owners who have lost a lot of money by not putting a daily inventory check into place. Once they did, however, these losses were soon eliminated.
Sometimes just putting the checklist together can be daunting. No worries!
Many of the NMRA staff are seasoned restaurant professionals with over 90 years of combined restaurant experience. Feel free to call us directly at 505-343-9848 if you have any questions about using managing inventory in your own restaurant.
Getting licensed by the state of New Mexico to be able to serve alcohol in your establishment is a great privilege…And a potentially expensive risk.
The price paid for serving to a minor, or person who is visibly intoxicated can be devastating to a restaurant.
Take advantage of all of the benefits that serving alcohol brings, while eliminating its potential losses.
First, talk to your employees about the importance of serving alcohol in a safe manner.
Then, above all, make sure all of your employees who are serving alcohol get the proper alcohol safety training.
We’ve all heard the horror stories of the drunk driver who kills a van full of students going the wrong way on the freeway. You don’t want your restaurant to be responsible for a horrific accident like this. Not only is it a senseless loss of life but the cost to our business and employees is beyond shocking.
Bottom line: If you plan to serve alcohol, get your staff trained. And if you get your staff trained, do it at a discount (with classes in Albuquerque or Santa Fe).
To make things even easier, you can have your staff take the online class, which you also get at a discount.
If you aren’t an owner, but a server yourself, ask your employer if they are NMRA members to get this member discount.
NMRA has been teaching alcohol server certification (ASC) safety for almost 20 years!
Insurance is the epitomy of minimizing losses and decreasing risks, so it's a key part of this pillar.
But restaurant insurance is not the same as home insurance. You want to make sure that your special needs as a restaurant owner are covered!
Certain types of restaurant insurance are an absolute must, others are fairly important, and still others are simply nice to have in case you need them.
Make sure you have the basic types of insurance that are crucial for any restaurant to have:
One of my favorite restaurants in New Mexico had a small fire in the kitchen. Had it been up to the owner, she could have had a make-shift kitchen up and running by the end of the week.
Unfortunately she spent the next 9 months fighting with her insurance company to pay for the coverage. She also fought with the building code folks, since she had to bring her entire historic building up to code in order to rebuild her kitchen.
If she had just had the right coverage for her restaurant, she could have saved herself all of this headache.
If you would like a quote on NMRA approved health insurance for your own restaurant, free to call us directly at 505-343-9848.
In 1989 restaurants couldn’t find work comp insurance in New Mexico. That’s why the Food Industry Self-Insurance Fund was created by the New Mexico Restaurant Association and the Grocers Association.
Since then this fund has been serving members, and giving back dividends when the fund does well.
Why is using a payroll service one of the steps for decreasing expenses?
Because as the owner of the restaurant, you are responsible to know how to pay your employees. Doing it wrong can mean BIG fines and penalties.
You have the federal DOL (Department of Labor) rules, on top of the state DOL rules, on top of local laws that mandate benefits to your employees…
Luckily having the right payroll service can make sure you are compliant with all of these rules, and keep you protected from these fines.
Like I said, restaurant payroll is complicated. If you are not a labor lawyer, I highly suggest not trying to make payroll alone. Use a payroll service.
A good payroll company will stay on top of all of the rules and regulations on your behalf, so that you don’t have to. Let’s face it, you have better things to do!
Of course, you should do your best to be knowledgeable of current labor laws, but we recommend you outsource your payroll. NMRA recommends Heartland payroll.
Here are a few more tips:
Too many times see restaurants in the news being sued by their employees for not paying correctly. One restaurant was not paying chefs’ overtime because they were on “salary”.
Unfortunately those chefs didn’t qualify for an overtime exemption and the restaurant owed $114,000 in back pay. Don’t let this be you.
Feel free to call us directly if you have any questions about employee handbooks or labor laws, in Albuquerque or New Mexico: 505-343-9848.
We already touched on employee policies above, but this is important enough to deserve its own section. Sexual harassment is BIG news nowadays, and restaurants are far from immune.
Remember it’s not just you. You may be harassment free - but you are also responsible for how your managers behave as well.
Having an Employee Handbook & key employee policies in place are crucial to minimizing potential losses due to any potential lawsuits.
In the era of “#MeToo”, having an employee handbook outlining codes of conduct is more important than ever.
Here are just a few questions to ask yourself, to see if you have the policies in place to protect yourself against lawsuits:
You don’t want to end up being on losing end of the of the “#MeToo” movement. Put rules in place that will protect employees and yourself, both from predators and lawsuits.
And of course, always be proactive to protect yourself from Employee Lawsuits by always acting with integrity and having Employment Practices Liability Insurance.
Unfortunately there are too many front page examples of sexual harassment in the restaurant industry. Fortunately the National Restaurant Association has a ServSafe workplace training on Sexual Harassment.
Get familiar with this training and require it for your managers and employees as well. The cost of non-compliance is too high, don’t let your restaurant be plagued by #MeToo lawsuits.
Feel free to call us directly if you have any questions about employee handbooks or labor laws, in Albuquerque or New Mexico: 505-343-9848.
The final way you can protect yourself against unnecessary losses is to ensure your restaurant's good reputation.
Not only is it dangerous to the health of your customers, not following safety procedures can be seriously damaging to your restaurant’s public image.
Don't let an accidental safety slip mishap turn into a devastating blow!
Protect your reputation from sick customers and devastating public relations by taking a few simple steps to make food safety a priority at your restaurant:
We’ve seen many recent stories of food safety scandals that have permanently damaged the restaurant’s reputation, from which they never fully recover.
Just one example is the Mexican restaurant chain Chi-Chi’s, which was bankrupted by the largest outbreak of Hepatitis A in U.S. restaurant history, in 2003. Four people died, one needed a liver transplant, and hundreds were sickened. This was a blow Chi-Chi could never recover from.
Feel free to call us directly at 505-343-9848 if you have any questions about our classes, food education programs, or food safety issues in general.
Want to join us and help make us stronger? Call us for a no-obligation chat: 505-343-9848.
Exclusive Offer: For readers of this article only, we are offering an exclusive one-month free membership promotion!
Finally the exciting part! If you’ve been running your restaurant for awhile, you probably already have your regulars; as well as foot traffic from your area.
But there’s always more that can be done to get more new paying customers in through your door. Here are the ones we’ve seen work the best:
Location can really make or break a restaurant’s success. Sometimes it’s having enough parking to fill the seats in your restaurant. Other times it may be the ease of access. Don’t just pick a location because it’s turnkey. Make sure you do your homework.
If you already have a location, think about how you could improve it with each of the criteria below.
Use these 7 “Success Factors” to evaluate or improve your restaurant’s location:
1. Visibility & Foot Traffic – How visible is it to passers-by, and how much foot traffic does the location already have? Do cars drive by the location a lot? Are there businesses nearby whose employees might be your regular customers? How much “low-hanging” traffic can you pick up, just from day one? You want all of these factors to work in your favor, not be something you are constantly fighting to overcome. Take your time to really analyze the location during all different times of the day (including days of the week!)
2. Parking – Imagine you have a completely full house and every seat is filled. Is there enough parking for every single one of your patrons? Make sure the land you buy includes this critical space. In the United States people will choose to go to another restaurant if parking looks like too much of a hassle.
3. Accessibility & Convenience – Let’s face it: people want things to be easy. Make sure there is convenient ingress and egress for your customers, including those with disabilities. If you have to make three U-turns to get into your parking lot, it doesn’t matter how great your food is, people will follow the path of least resistance.
4. Surrounding Businesses and Direct Competitors – How are other businesses doing in your same area? Are they thriving? Going out of business? This can tell you a lot. Also look out for direct competitors in the area. You might not want to open a pizza place directly in front of Pizza Hut. You want the other businesses that rely on foot traffic to be doing well, but you don’t want too many identical competing businesses, either.
5. Building Condition – It might be the quaintest & most charming space this side of French Provence, but don’t let your love of the atmosphere blind you to the actual conditions of the building. Check that the building is in good repair and that leasehold improvements are reasonable.
6. Zoning. You might be surprised to learn that zoning of restaurants is different in Albuquerque than the rest of New Mexico. Often you need to know your local zoning laws, on top of your state & federal ones. And sometimes the location that clearly looks like it was meant to be a restaurant might not be zoned correctly for one. You need to know all of this before you buy.
Bear in mind your restaurant must be at least 300 feet from schools and churches in New Mexico to obtain a liquor license. Knowing the proper zoning laws can be a minefield. (If you have any questions about the zoning of your particular location feel free to call us at 505-343-9848 to get an answer )
7. Legal Protection. In short, HAVE A LAWYER REVIEW YOUR LEASE. Nothing beats the professional eye of a seasoned lawyer who will protect you against any hidden pitfalls you may have missed.
I recently saw a news story about a restaurant that had to move from a successful location TWICE because he didn’t have a lease that protected him from his landlord.
Can you imagine finally establishing your restaurant and your landlord leases your restaurant space right out from under you?
To find out more about this and other NMRA membership benefits call us directly at 505-343-9848 to get any of your questions answered.
So you have your menu, a great location, and your food costs are down. You’re all set for success right? If only! Don’t make one of the biggest mistakes we see new (and seasoned!) restaurants make, which is to completely neglect the MARKETING part of the restaurant success equation.
In an ideal world, all that would matter would be the cuisine you serve and the space you have created. But in the real world, you simply must give time and energy to marketing your restaurant too. Not only to get customers through the door – but to keep your current ones coming back for more.
But with all of the other pressures and demands on your time, how do you make time for marketing? And what exactly should you be doing to market your restaurant?
Here is what we see the most successful restaurants doing…
Make marketing a priority. Good marketing doesn’t just happen by itself. You as the owner or operator have to make it a priority.
Here are how the most successful New Mexico restaurants market their restaurants more effectively:
We are big believers in restaurant marketing, so we’ve worked hard to make marketing that much easier for our members:
If you’re interested in learning more about restaurant marketing or any of these member benefits, call us directly at 505-343-9848 to get your questions answered.
With a little creativity, you can come up with even more appealing promotions that will attract new customers. Have fun with it!
Here are a few ideas to let your imagination run wild...
Once you decide what your promotions will be, we can help you save money on getting the word out to more people, in several ways:
Want to join us and help make us stronger? Call us for a no-obligation chat: 505-343-9848.
Special Offer: For readers of this article only, we are offering an exclusive one-month free membership promotion.
Repeat customers are the life blood of any business. Even more so for restaurants. Customers who have come in once, are twice as likely to come again. Here’s how to keep them once you get them…
You may be surprised to learn that one reason people stop coming back to a restaurant has nothing to do with the food, location, or even the prices.
It’s how they were treated by the staff of that restaurant! Rude or slow servers can kill your repeat business.
Fortunately there are great people out there that want to work in our industry. Even better, you have all sorts of training and workforce development available to you to make your good employees great.
I know a restaurant executive who took a complaint from a customer saying that they got home with their take out meal and it was missing two tacos. He immediately asked for the customers address and showed up at her house with a dozen tacos. He made a customer for life.
Take that little extra step with your customers & watch them pay you back ten-fold with good will and patronage.
Once you decide what your promotions will be, we can help you save money on getting the word out to more people, in several ways:
One day customers rave about you, the next day you get a scathing Yelp review. Why is that? Inconsistency of service & protocol is likely the root cause.
What gets checked gets done…from side-work checklists to food safety temperature checks, make sure someone is responsible and then hold them accountable.
Standard Operating Procedures (SOP) are critical in the restaurant industry, and used by all of the most successful restaurants we have seen.
Just coming up with WHAT to put on your checklist can be a time intensive task. If you are struggling to come up with your own checklist checkout the Managers Red Book (MRB) by HotSchedules.
Use this tool to track, and continually assess, all aspects of your restaurant business. The MRB has checklists for everything already proven to be invaluable for successful restaurants:
Once you decide what your promotions will be, we can help you save money on getting the word out to more people, in several ways:
Yes, it’s old school, but there’s something about holding a card in your hand that makes it seem that much more valuable.
How many times have you or somebody you know gone to a specific restaurant solely because you had a gift card, or a loyalty card you wanted to get fill up?
The fact is, cards bring people in the door!
Once you get your loyalty & gift cards in place, make sure you get the word out about them! Here’s how NMRA can help you with this as a member:
Want to join us and help make us stronger? Call us for a no-obligation chat: 505-343-9848.
Special Offer: For readers of this article only, we are offering an exclusive one-month free membership promotion.
Even if you have the best marketing and menu in place, the actual running of your restaurant can be a challenge. Make it easier for yourself in every way that you can!
Unfortunately 60% of restaurants fail in the first year and 80% fail in the first 5 years. The odds are not in your favor.
Even if you already have been running your restaurant successfully for awhile, there are probably problems that you are currently facing that another restaurant owner has already successfully overcome. Why figure it out all by yourself when you can take advantage of others’ hard-earned knowledge?
Knowing what you are getting into ahead of time is critical to your success.
There is much to know about running a restaurant. It’s much more than knowing how to cook. It’s as if you are managing a manufacturing plant and a retail outlet in the same building with lots of employees and lots of potential pitfalls.
All of which you can only learn by, well….DOING it!
If you can, get experience in a large franchise restaurant. Chains have the best operations procedures and systems that have already been pre-tested and proven successful. This can be an invaluable education.
If you can’t work in the industry for years, you can achieve a similar benefit by speaking with other seasoned owners and getting hard-earned knowledge from people who are in the trenches. The fastest way to do this is to attend industry networking events, and to join membership organizations that give you direct access to high performers in the restaurant field.
If you can spend time in the industry before you make the move to ownership you save yourself a lot of headaches and potential failure.
If you don’t have the experience needed be sure to partner with someone who knows the business so you can be successful.
When I started my restaurant I personally had no experience. But my husband, who was my partner, had been in the industry for years. He had worked at a major chain restaurant and brought many of their systems to our restaurant.
What we didn’t know we learned by making friends with other restaurateurs through our membership in in the New Mexico Restaurant Association.
Belonging to the association gave us access to insider news, regulatory updates, negotiated discounts, discounted food safety and alcohol classes, and many other wonderful restaurateurs we still call friends today.
Once you get your loyalty & gift cards in place, make sure you get the word out about them! Here’s how NMRA can help you with this as a member:
Feel free to call us directly at 505-343-9848 if you have any questions about NMRA membership, or anything else about running a restaurant in New Mexico!
It’s hard to keep on top of all of the moving parts of running a restaurant! But checklists can make a smooth running operation so much easier. What gets checked gets done.
From side-work checklists to food safety temperature checks, make sure someone is responsible and then hold them accountable.
This is a repeat of a previous tip, but it’s important enough to mention again: Standard Operating Procedures (SOP) are critical in the restaurant industry, and used by all of the most successful restaurants we have seen.
Just coming up with WHAT to put on your checklist can be a time intensive task. If you are struggling to come up with your own SOP checklists, checkout the Managers Red Book (MRB) by HotSchedules.
Use this tool to track, and continually assess, all aspects of your restaurant business. The MRB has checklists for everything already proven to be invaluable for successful restaurants:
This guide to your success was obviously written by the New Mexico Restaurant Association because we want our members – and all restaurant owners in New Mexico - to succeed beyond their wildest dreams.
Being a member of our association can help you do just that. From lobbying, to create real policy change in Washington and the state capital, to getting you dramatic discounts on necessary overhead costs, to giving you access to the best employee training available today, and more.
We are proud to say that the mere hundreds of dollars an annual membership costs, gives our members thousands of dollars in savings….As well as crucial benefits every single year.
If you are a restaurant owner or professional in New Mexico, becoming a New Mexico Restaurant Association member, is simply a no-brainer. The return on investment is priceless.
To learn more about membership, or join the New Mexico Restaurant Association: click here.
To ask us any question about NMRA membership, or running a successful restaurant in New Mexico, feel free to all us directly at 505-343-9848.
Want to join us and help make us stronger? Call us for a no-obligation chat: 505-343-9848.
Special Offer: For readers of this article only, we are offering an exclusive one-month free membership promotion.
Copyright © 2018 · by The New Mexico Restaurant Association