A smiling female bagel shop owner talks on the phone while working on a laptop in her shop, illustrating the importance of effective management practices for restaurant profitability.

Calling all quick service restaurant owners… Ready for the hard truth? If restaurant profitability is a struggle for you, it’s probably because you’re making one (or more!) of these common mistakes.

The good news is that you’re not alone. Running a restaurant is tough and most of us didn’t get into this industry because of our stellar financial acumen… so mistakes happen. 

The BETTER news is that once you fix these mistakes, you’ll be on your way to achieving and maintaining restaurant profitability. Some of these fixes might be major while others are quick tweaks that will save you a boatload of time and money. 

If you’re ready to discover your path to restaurant profitability, you’re in the right spot! Let’s dive into the most common mistakes – and solutions – to achieving restaurant profitability. 

5 Mistakes Hurting Your Restaurant Profitability 

1. Not prioritizing restaurant profitability

Despite popular belief, restaurant profitability isn’t just whatever is leftover after you pay off all your expenses. It’s the lifeblood of your business. 

Restaurant profitability is the difference between succeeding and failing.

Between razor thin margins, increasing food costs, and high staff turnover, restaurant profitability likely feels like a stretch, if not downright impossible. Which is why making restaurant profitability a priority is so important. 

Kasey Anton, author of Profit First for Restaurants, says it best: “[If] we would understand from the outset that profit is a choice … our businesses would thrive.” 

Solution: Decide to commit to the fact that achieving a monthly profit is as essential as making payroll and paying your bills (because it is!). 

2. Not choosing restaurant-specific accountants and bookkeepers who understand restaurant profitability

Let’s just admit it: Restaurants are chaotic and most of us who have chosen this industry thrive in chaos. Typically, accountants do not… 

Most accountants, bookkeepers, and other financial advisors live in a world with neat rows of numbers built for logical, stable businesses. Restaurant finances are in a constant state of flux and general accountants and bookkeepers are not experienced in this specific type of work. So, they tend to make recommendations in hopes of creating steady conditions that aren’t necessarily in reach, or relevant, to your business.

Solution: Choose an accountant or bookkeeper with restaurant industry experience (and watch some real magic happen!)

3. Not accepting uneven daily sales

Wouldn’t it be amazing if every day was like Friday and Saturday night? Picture it: A steady stream of customers, fully staffed, and high volume tickets seven days a week, all year round! 

Unfortunately, this is not typical for most businesses, especially not the restaurant industry. Ebbs and flows throughout the week, the month, and the year are normal. But, too often restaurant owners (and their general accountants…) try to “fix” slow days with restaurant marketing and promotions instead of capitalizing on the high volume days to improve restaurant profitability. 

Solution: Instead of chasing the weekend high sales volume throughout the week, take an honest look at your overall revenue through the week, the month, the year, and plan your spending with the revenue you actually have, not with what you hope to have. 

4. Not tracking cash flow and restaurant profitability

If you’re like most restaurant owners, you take a look at your bank accounts at the end of the month and pay your bills with whatever cash you have on hand. This might get you through the first few months, even years, of ownership but if your goal is to improve restaurant profitability, then tracking your cash flow is essential. 

There are a lot of reasons that cash flow gets ignored: it’s too cumbersome to track on a regular basis; no time to do it; assuming your bookkeeper is tracking this; you’re just “not good” at numbers, etc. 

Solution: Make using a budgeting and cash flow tracking tool a standard part of your business operations. Table Needs Cash Flow is a restaurant budgeting and restaurant profitability tool that’s built into the Table Needs POS system, which makes tracking your cash flow incredibly easy. 

5. Not being intentional about spending

There’s this idea called Parkinson’s Law that states that “work expands so as to fill the time available for its completion.” In other words, if you give yourself an hour to do a task, it will take you an hour. If you give yourself all day, that same task will take you all day to complete. 

This same idea applies to your restaurant’s financial situation. If you have $5,000 in your bank account, you’re going to spend nearly every penny to pay off bills, pay your staff, and buy that new piece of equipment you’ve been wanting. Now what happens is that you don’t have money for the next vendor invoice, to repair essential equipment, or hire new staff. You’ve spent it all. 

Solution: Create a financial plan and restaurant budget that covers all your overhead, your food costs, your labor costs, as well as restaurant profitability, savings for repairs, and taxes. Instead of spending every dime you have available, you will more intentionally spend your hard earned revenue. 

Ready to boost your restaurant profitability?

Achieving and maintaining restaurant profitability is essential to your restaurant’s success but you don’t have to figure it out on your own! From daily operations to financial services to marketing and more, Table Needs helps independent quick service restaurants, coffee shops, and food trucks discover their path to profitability.

Learn more about how we can help you achieve restaurant profitability and success.

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