The (not so) secret to success in the restaurant business is volume. The higher the sales volume, the fresher the product, the greater the satisfaction your customers feel and the more they return, increasing your sales.
The doubling of sales volume will substantially increase your profits. Rent and marketing costs, along with many other costs remain constant or increase only slightly as sales revenues increase.
In this example, we have a food cost of 25% (fairly standard), other variable costs of 10% and fixed costs of $6,000 per month.
|SALES REVENUE (PER DAY)||$400||$600||$800|
|FOOD COSTS (25%)||$100||$150||$200|
|OTHER COSTS (10%)||$40||$60||$80|
As the table shows, as sales volumes continue to increase, the profit continues to increase. A doubling of sales can increase your profits by 500%!
Revenues of $800 per day equates to around 150-200 servings per day. In a high traffic location, you can realistically expect to average 200-400 servings per day. Additional products for breakfast, lunch and snacks will show a similar disproportionate increase in profits with an increase in revenue.