Wednesday, 23 October 2013

Revenue Sources for a Restaurant !!!

There are typically 5 sources of revenues for a restaurant/food business:

1) Walk-in Customers - Unless you are a take-away/delivery only unit, this will probably be the biggest component of your revenue. You need to figure out a way to get repeat customers and referral customers - the effort for getting new customers all the time is too much.

2) Take-away customers - For reasonably priced/budget restaurants, this could be a reasonable revenue source. This will also depend on the product offering and how convenient you make it for your customers to pick up the food (easy parking for their vehicles - atleast for 2 wheelers, is a big criterion for good take-away joints)

3) Door Delivery Orders - Customers in India expect most restaurants (even some of the fine dining ones) to offer door delivery services. Unfortunately, this one appears easier to do, than it actually is. The dynamics and operational issues related to door deliveries fascinate me and I will write a separate post on this.

4) One Time Party/Bulk Catering Orders - This is a very profitable source of revenue for most restaurants. From what I know, most profitable restaurants get a few party orders every month and this really boosts their profitability and helps them tide over lean days. Here quality of service and felxibility are key. If you can figure this one out and do a good job, it could generate significant repeat/referral orders.

5) Regular Meal Catering Orders - This is one of those very attractive looking revenue sources that a lot of new restaurants try to get into, but in reality turns out to be worthless in most cases. Typically the pricing is so low for these orders that if you include the food cost, the effort for large orders and the transportation, the numbers don't add up. I believe this needs to be managed as a separate business not linked to a restaurant for it to make business sense. I will write a separate post explaining this in detail.

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