How to make a Takeaway profitable and successful?
By Kevin Moyse
Good menu design makes you money and cheap menu printing saves you money. But making your takeaway profitable and successful is NOT just about getting cheap takeaway menus designed, printed and distributed to your customers. If it was then most takeaways would be successful, unfortunately most takeaway restaurants fail within the first few years
So how do you make money with a takeaway? How do you beat your competition to the customers? How do you build a successful takeaway business? The truth is there isn’t a single solution to these problems, there are in fact multiple ways, used in conjunction, all of which will impact on how well your business does.
Firstly we will have a look at how to make sure your takeaway is profitable and then we will investigate how to make it a successful takeaway restaurant.
How to make your Takeaway profitable?
How much profit does your takeaway need to make to maintain it? Unsuccessful takeaways have no idea what this amount is, as a consequence bills pile up and their businesses fail.
All of the successful takeaway owners that Cheap Takeaway Menus deal with know exactly how much their products cost to produce and sell, do you? Unfortunately and sadly most takeaway owners have no idea how much a dish costs them to make. When pricing their products they collect menus from the surrounding takeaways and tweak them to be cheaper. So how can you know how much profit you are making if you do not know the cost of making it? How can you be sure that the prices you are copying make you profit? The answers are simple… you can’t! You need to know what your costs are in order to adjust and manage your profit margins.
So the first step to making your takeaway business profitable is to work out your fixed and variable costs. The fixed costs are the ones you have regardless of selling any food and include your rent, staff, printed takeaway menus, loan repayments, insurance etc. The variable costs are the ones that you have for the food you sell and include the ingredients, fuel for delivery, to heat the oven etc. The more items you sell the greater the variable costs while the fixed costs remain the same.
As daily sales vary depending on which day of the week it is you need to use a period of a week, month or a year when working out your costs. Typically takeaway owners use a week as a standard time period. So divide all your fixed costs so that you know how much it costs per period to keep your takeaway open without selling any food, i.e. the total fixed cost to run your takeaway for a week. This is the minimum total profit required from all sales within that period to maintain your business without incurring debts, i.e. to ensure that it breaks even.
Next you need to work out the variable costs starting with the all the ingredients, yes every single one! Weigh the ingredients for each product and work out its cost. Work out how much your oven or stove costs to run to make the product. Add this to the cost of the ingredients. Add on any other variable costs i.e. packaging and delivery costs etc to get the total cost to produce your food.
Now that you know how much your products cost to produce you can add on your gross profit margin. This is usually somewhere around 60-70% of the selling price and can be easily worked out by multiplying the variable costs by 3.5. So if a menu item costs £2.00 to produce you must sell it for around £7. The total gross profit margin of all your sales must be higher than your fixed costs. Therefore if the weekly fixed costs are £1,000 you need a weekly turnover of £1,400, i.e. £1,000 gross profit margin on variable costs of £400 to break even. In this scenario net profit is achieved when the sales are over £1,400 per week. As you can see from this example it is very important to know what your fixed and variable costs are to make sure your total gross profit margin is enough to achieve any net profit.
To work out your products Selling price
To work out the sales needed to achieve minimum Gross Profit Margin
To work out your Gross Profit margin from your Total Sales
Now you have a rough idea on whether you are making or can make a profit with your takeaway, how do you make it a successful takeaway and ensure the profit continues?
How to make a takeaway successful?
- Your primary and most important tool for this is marketing! The best thing for this is well designed and printed takeaway menus. You should always be distributing your printed takeaway menus to your clients (see What are the Benefits of Distributing Takeaway Menus?) People easily and quickly forget about a takeaway outlet, so you need to keep reminding them about your business. Good menu design will make you money! Make sure your menu design is better than your competitors! For more info please see What is Good Menu Design? and 10 Steps to a More Profitable Takeaway Menu
- It is very important that you produce good food. A good takeaway menu design will get the customers to try your food but only the food quality will make them come back for more. If your food isn’t good enough then you are unlikely to get repeat orders. Monitor your orders carefully to see if people re-order from you, if they don’t try to find out why. Without repeat orders from regular customers your takeaway business is doomed to fail!
- Location location location.... The location of the takeaway store or shop is very important. It must engage with passers-by and create footfall into your shop. Passing trade will help maintain your business.
- Up selling is a major factor for successful takeaways, your staff should always ask the customer if they would like to go large, if they want a drink or fries with their order etc. You have the customer ordering food; try to make them spend more!!! Remember that this trick is free, it costs nothing to achieve and could result in greater weekly takings. If you gained an extra £1.00 per order how much would this mean to your profit margins?
- Make sure your takeaways signage stands out and is preferably illuminated at night to draw attention to it. Passing customers will notice the bright lights and be draw to your shop. If the branding is clear on the signage hopefully it will be associated to the takeaway menu delivered through their letterbox - “I know this takeaway it’s the one by the traffic lights near the Post Office, we haven’t tried them yet what would everyone like to order?”
- Keep your menu simple with clear clean branding. Make it easy to order from your menu; keep it uncluttered and easy to read.
- Make your products different to all your competitors. Variety is the spice of life; people like to try to new things. Make your products better and more appealing than your competitors.
- Make sure your food is always fresh and served or delivered hot. Use stay warm delivery bags or boxes.
- All staff must be well trained, friendly and helpful. This is especially so for any member of staff that comes into direct contact with your customers, like delivery drivers and front of house staff.
- If staff are answering the telephone ensure they speak clear English (or the language of the country your takeaway is in)
- Change your Special offers and deals regularly, this creates interest and variety
- Promote your offers etc via email, text as well as in-store and on takeaway menus
- Promote your own website in store and on all marketing, takeaway menus etc.
- Use a portal website like Just-Eat.co.uk to benefit from their national advertising campaigns and brand pull.
- Keep all your visible areas within your takeaway spotlessly clean and tidy at ALL times.
- Your kitchen should also be spotless at all times, hygiene is incredibly important in any catering business - you do not want customers getting sick after eating your food. Ensure to follow all the health and safety guidelines!
When looking at starting a takeaway business have a close look at the market leaders and not just the small takeaway around the corner. These big players are KFC, McDonalds, Pizza Hut and Burger King. Use their business models to influence your own. Look closely at the number of food products on their menu, at new products they create, at the offers they create, at their up selling methods, at their simple and striking branding (on menus, advertising, vehicles, staff uniforms etc) and at their locations. If you can do half as well as they do with all of the above your takeaway business is bound to be a success, these guys are the WORLD leaders when it comes to takeaway businesses and there is a very good reason for this!