Reducing costs, gaining customers, retaining quality
By Kevin Moyse
At Cheap Takeaway Menus we are all about finding the perfect balance between cost and quality, when it comes to takeaway menus and menu printing. We don’t believe they are mutually exclusive. We think that it is not only possible to provide professionally designed and printed, high quality, full colour takeaway menus for a low cost, it is senseless to do anything else. Sure, we are a business and we are interested in our own success, but if it comes by not paying much attention to the needs of our customers, then it is counter-productive. Your takeaway is vital to our takeaway menu business. If we provide cheap takeaway menus of high quality, we help your takeaway thrive. If your takeaway thrives, Cheap Takeaway Menus succeeds too. It’s simple, it’s logical, it’s sensible, it’s good business.
So we’re well into the new year now. Business plans are being followed, changes are being thought about, the rest of the year lies ahead waiting for your business to pass through, making money as it goes. How about a few little tweaks to maximise your bank balance? Here are a couple of ideas for saving, and therefore making, some extra money.
You’ll know from experience that if your menu prices are set too low you’re in danger of going broke, and if you’re too pricey then customers will stay away in droves. Walking that fine line between being competitive and profitable is a skill all business owners have to learn. The best way to do that is through research, but more importantly it is by knowing your business inside out. In your case it’ll be knowing your business inside out and your menu inside out, back to front, side to side, and upside down. Having that knowledge equips you with all the raw materials you need to work out how to be profitable (or more profitable). You may have already done this in the past, but it can’t do any harm for you to revisit a few figures to see what might have changed, and to adjust your selling strategy accordingly.
The first thing to do is to calculate both your fixed costs and your variable costs. Fixed costs include rent, staff, printed takeaway menus, loan repayments, insurance etc. Variable costs are for the actual food you sell so this means ingredients, fuel for delivery vehicles, gas/electricity to heat the oven etc. Using a single week pide all your fixed costs so that you know how much it costs you to keep your takeaway open without actually selling food: this will give you a figure for the total fixed cost to run your takeaway business for a week. This amount equals the absolute minimum total profit you need to make from all sales within that period to maintain your business to break even.
Next you need to work out the variable costs. Start all the ingredients. Weigh the ingredients for each product and work what a single dish will cost. Also how much will it cost to run your oven or stove to make the product. Add this to the cost of the ingredients. Add on any other variable costs i.e. packaging and delivery costs to calculate how much it costs in total to produce your food.
Once you have worked out what your products cost to produce you can add on your gross profit margin. This is usually about 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 you £1.00 to make you need to price it at approximately £3.50. 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 (£1,000 gross profit margin on variable costs of £400 to break even. In this scenario net profit is achieved when sales are over £1,400 per week. It is vital to know fixed and variable costs to ensure your total gross profit margin is enough to generate any net profit.
To work out a product’s 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
It might seem like taking cheeky short cuts is a sure-fire way of saving money. It isn’t. Quality breeds success. Poor quality will be found out. So when it comes to your suppliers don’t skimp, but be smart. Shop around, find the right balance – great quality and reasonable price. If you don’t you will be lumbered with poor quality supplies from suppliers who will have little to lose by letting you down.
This philosophy doesn’t just apply to your ingredients, it goes for every supplier: your packaging, your uniforms, your equipment, and of course your takeaway menus. You’re looking for high quality at a low cost from a reliable source. So in essence you are looking for Cheap Takeaway Menus to supply your menus, and companies with the same commitment and quality as us to supply you with everything else.
Know your customers. Who are they? Knowing your customers and knowing your business go hand in hand. Your location, your image, your service, your products, and your reputation will all influence the type of clientele you attract. If you want to consolidate that customer base have a think about introducing a few variations on the same theme, removing less popular items, enticing them to make more orders. If you want to try to widen the demographic, then perhaps examine how you can augment your menu or your services. Perhaps you don’t yet have a website or your delivery area could be added to (see below).
Don’t be afraid of change, change can be good. If you look at your takeaway now compared to when you opened, there have probably been a lot of changes. Change can mean the difference between success and great success. And don’t forget, it’s as easy to change something back to the way it was if it doesn’t quite pay off for you. The only thing that should be set in stone is your flexibility.
If you don’t deliver, start. If you do deliver, deliver more. It’s the perfect way to build up your customer base. Who doesn’t love having the ability to sit in your armchair, order and pay for food, and then sit back until there’s a knock and the door delivering it. We’ve talked about delivery areas and menu distribution strategy before, so you know there are systems which you can try which have a measurable effect. Increasing the area you deliver to, by just a mile or two will generate more business for your takeaway.
Just make sure that you factor it in to your budget. The further you deliver puts your variable costs up and this needs to be accounted for. Additionally, it may increase delivery times so perhaps rethink your delivery rota and buy some more hot boxes to make sure your food is as impressive when it arrives as it was when it left.
Promotional opportunities are so widespread and available these days that you can virtually bombard your audience with information. Best not to do that though because saturation is not often the best way forward, but what we’re saying is that the chances are there to promote yourself and to do it well and to do it thoroughly. We’re not just talking about advertising here; business promotion has gone so far beyond advertising now that traditional adverts are better used sparingly and spectacularly to achieve the right effect and the right result. These days social media is a great way of instantly interacting with your customers, as is building up a database of your customers’ contact details (email addresses, mobile numbers etc.) so you can let them know about menu changes and special offers, or even specifically target them with marketing materials. Keeping your customers up to date with everything going on in your takeaway keeps you in their heads and if you exist in that mental landscape you are easily brought to mind.
Your takeaway business, like any business, is an organic thing. It lives and breathes, grows and progresses and changes. Making adjustments to all aspects of your business is a fantastic way to nurture it. You can get rid of what doesn’t work, try something completely new, or make what works work better. Little twists on existing strategies show that you take nothing for granted, that you think of your customers’ needs as much as you think of your own, and that you think about the future and you see yourself there.