According to a 2025 report from Toast, the average profit margin for restaurants is roughly 3 to 5%. That doesn’t leave a whole lot of breathing room. So when business slows down unexpectedly or food costs go up suddenly, those margins can get real tight, real fast.
So how can you give yourself a bit more breathing room? How can you build a bigger cushion for those unpredictable ups and downs? How can you squeeze more profit out of your business?
Back of House restaurant tech expert Spencer Michiel says “It all comes down to two things – controlling costs and raising revenue. I believe there are a lot of effective ways to do both if you’re willing to be creative and embrace some of the new tech out there.”
Read on for a few actionable steps you can take right away to increase restaurant profits, even in these uncertain times.
As you look for ways to boost your bottom line and improve profits for your restaurant, your focus should be on a combination of restaurant revenue optimization and restaurant cost control. Here are a few ways you can do both.
Patrick McDonnell, founder of a menu design group called Flapjack, explains that the way you present your menu will have a direct influence on how your customers spend their money. Patrick observes, “When you're running that much revenue through a single piece of paper, you should be highly incentivized to have that single piece of paper be as well structured as possible.”
The layout, design, and even the language used in your menu can have a big impact on how your customers make dining decisions. This is why, says Patrick, “We need to think about these things a little more intentionally. A restaurant could easily pull another five or six figures a year just by rearranging things [on its menu].”
This is where menu engineering can directly increase restaurant profits. Menu engineering is an approach to restaurant revenue optimization that involves making strategic decisions about where you feature certain menu items, about how to position value options, about how to upsell add-ons, and more.
But these strategic decisions must be driven by more than instinct. As Spencer explains, “The key with menu engineering is that you’re not just guessing. With the right technology, you’re making decisions about how to optimize your menu based on real data.”
Spencer adds, “Restaurant operators shouldn't just focus on food cost percentages when making these decisions. Ultimately, you need to look at the items on your menu that are most profitable. This is about cost versus contribution to the bottom line.”
Food costs will consume between 28 to 35% of your restaurant’s sales right up front, says an article from the National Restaurant Association (NRA). But, the NRA notes, this is also an area that is ripe with opportunities to cut waste.
Sources of waste can include food spoilage, excess trimmings from routine food prep, and dishes that customers send back or don’t finish. Spencer notes that “These causes of waste are actually very preventable.”
“It starts with establishing a culture of waste prevention with your team. But it’s just as important to make sure you’re really pinpointing the sources of waste,” says Spencer. A lot of restaurants are turning toward advanced food inventory management technology in order to do exactly that. Many restaurants are using this tech to order, procure, and use food supplies with greater precision.
The best inventory management tools provide advanced analytics so that you can more accurately forecast food needs based on historical data. Your inventory management system can also provide a deeper dive into your recipe costing, especially as it relates to plate size. For instance, dishes that routinely go unfinished are a great target for recipe adjustment.
If you have underlying concerns about investing in inventory management technology, the NRA reports that every dollar a restaurant spends on waste prevention saves $8.
One of the best ways to raise your restaurant's revenue is to find new channels for bringing it in. More specifically, look for revenue streams that are already compatible with your existing business. As a restaurant owner, you already have access to certain resources, such as a food-safe kitchen, a dining room space, and a team of restaurant professionals.
Consider streams of revenue that make effective use of these resources. As Spencer points out, “For many restaurants, this means expanding into spaces like catering or event hosting. These revenue streams offer quite a few advantages, including more predictable inventory and staffing needs and, perhaps most importantly, a way to bring in money even when day to day foot traffic is down.”
Restaurants that are venturing into these areas of operation for the first time can also benefit from a variety of sophisticated tools. For instance, a platform designed specifically for catering can help you create a catering menu, accept digital orders, and integrate with your restaurant’s loyalty program. Tools designed to support event hosting can help you book private events, create floor plans, accept pre-orders for food, and more.
“One of the things I hear from restaurant operators all the time these days is that customers arrive with certain expectations,” Spencer. “There is a growing focus on making sure those expectations are being met because this translates into customer satisfaction, which in turn translates into positive reviews and repeat business.”
Obviously, a lot goes into creating customer satisfaction including great food, great service, and great atmosphere. But diners are showing up with a whole new set of expectations today.
As Spencer notes, “A lot of consumers understand that food costs have gone up, and they’re willing to pay the premium to go out. But they expect certain things for that money, including convenience, personalization, and the occasional reward for their repeat business.”
At the most basic level, curating this kind of experience requires staff training, quality control, and cleanliness. And a lot of restaurants use the mobile ordering and payment processing tools that come with their POS (point of sale) systems to improve speed, efficiency, and accuracy.
But the real key to personalization is a strong, data-powered loyalty program. A good loyalty program makes it possible to reward your regulars, personalize marketing outreach, and tailor specials to individual preferences.
Ultimately, the tips above are just a few of many restaurant cost control and restaurant revenue optimization strategies. You have plenty of options, and every restaurant is different.
The best solutions for your restaurant will depend on your unique needs and goals. Let’s chat and figure out exactly what you need to start boosting those profits today. Schedule your free, personalized consultation with Spencer or another one of our in-house restaurant tech experts today and we’ll get you started.