Today, off-premise investments in catering, delivery, takeout and online ordering are a survival tactic needed to fuel top-line revenue growth. But will those investments lead to increased profit margins? For many, it isn’t entirely clear, which illustrates the importance of optimizing your restaurant’s food and labor operations.
The motivation behind off-premise investments
There are two primary motivating factors that drive brand’s off-premise strategy—modernization and increased revenue.If there’s one thing restaurants can’t do today, it’s give the impression that they are old and antiquated. If guests don’t think you’re capable of providing the experience they seek, they will go elsewhere.
Additionally, implementing technology for off-premise service should deliver a positive return on investment. If it’s easier for guests to order and receive meals, it increases the opportunity for sales. True Food Kitchen CEO Christine Barone told Restaurant Business earlier this year, “Someone who decides they’re going to have dinner on the couch is someone who’s going to have dinner on the couch. They’re not going to come into the restaurant.” Getting a sale from someone who was never going to come in is a huge win.
Sales data backs Barone’s idea. According to Technomic, off-premise sales growth is outpacing overall industry sales growth, and the gap appears to be widening. Reports have surfaced that takeout for pickup, direct delivery, third party delivery, and catering combined for more than $200 billion in sales last year.
How to drive the bottom line in the off-premise era
Brands may be spending more each year on guest-facing technologies, but those numbers still pale in comparison to the average restaurant’s top two cost centers–food and labor. Investing in off-premise may be the key to your restaurant’s survival in today’s marketplace, but investing in your food and labor operations is the key to winning long-term. After all, even if the top line grows, it’s still the bottom line that matters most.
As tech stacks become more complex, a strong back-of-house food and labor operations (BOH-FLO) platform will provide the foundation the restaurant needs to succeed. The right platform will ensure that shift schedules and food costs are optimized, which tightens spending and increases profits.
As tech stacks become more complex, a strong Back-of-House Food & Labor Operations (BOH-FLO) platform will provide the technology foundation the restaurant needs.
Maximize a growth revenue opportunity
If the gap between off-premise sales growth and overall industry sales growth continues to widen, maximizing off-premise profits becomes increasingly critical. Currently, off-premise represents 38% of all restaurant sales, but while overall industry revenue is projected to grow by 3.3% this year, off-premise sales are expected to grow by 5.6%. That means off-premise will make up between 60 and 65% of overall industry sales growth this year. A restaurant that does $1 billion in sales and grows in line with the industry will earn an additional $20 million from off-premise sales.
How much additional profit will that growth provide? By optimizing food costs and automating shift schedules for maximum team productivity, restaurants can increase profits by up to 5% of sales.Your BOH-FLO is providing $1 million incremental profit solely from annual off-premise growth.
Ultimately, you should be excited to enter the realm of off-premise, and with the right food and labor operations back office tools, you can ensure it’s a profitable endeavor.
Want to know more? Visit us to learn how to optimize food and labor costs and maximize profits in all your restaurants.